What does CAC mean?

Definition and explanation

CAC stands for "Customer Acquisition Cost," which is a metric used by businesses to measure the cost associated with acquiring a new customer. This includes expenses associated with marketing, sales, and any other activities that are required to convert a potential customer into an actual customer. Knowing the CAC is important for businesses because it helps them understand how much money they need to spend to acquire new customers, and to determine if this cost is worthwhile. By comparing the CAC to the Lifetime Value (LTV) of a customer, businesses can also determine if they are profitable over the long term.

Why it matters in sales

CAC is a prime factor in the sales organization, for without it businesses wouldn't know the price they pay to own a new customer. This cost ranges from marketing events to advertising or even from daily commuting. Measuring CAC allows businesses to examine and identify how much money they need to attract a new customer, and decide if the cost is worth it or not. CAC helps businesses to be wiser with their finances, and act upon the truth that sales teams don't own a customer, but instead rent them until they have decided to depart from the company. Knowing CAC and its metrics is the only way to keep the financial faucet turned on and not have it shut off with a sudden surprise.

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