Customer acquisition cost

Customer acquisition cost is what it costs on average to win one new customer: all sales and marketing spend for acquisition divided by the number of new customers. Together with customer value it forms the core arithmetic of many growth models: as long as a customer is worth more than they cost, scaling seems rational. The pitfalls are notorious. CAC almost always rises with scale because the easiest customers come first, allocating brand spend to individual customers is arbitrary, and a low CAC may simply mean you caught buyers who were coming anyway. Steering on CAC without testing incrementality optimises the metric instead of the growth.

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