Customer acquisition cost (CAC) is the total expense a company incurs to gain a new customer. It includes marketing spend, sales expenses, and any resources used to move a prospect through the funnel.
CAC is one of the most important metrics for understanding profitability, because it shows how much it costs to win business compared to the revenue customers generate. In simple terms, if a company spends $50,000 on marketing and sales in a given period and gains 100 new customers, the CAC is $500 per customer.
How is CAC calculated
The formula for CAC is:
CAC = Total marketing and sales expenses ÷ Number of new customers acquired
Marketing and sales expenses typically include ad spend, salaries, commissions, software tools, events, and content creation. Companies may refine the formula by separating acquisition costs for different segments, campaigns, or channels.
For example, a SaaS business might calculate CAC for inbound leads separately from outbound to see which channel produces customers more efficiently.
Why CAC matters
CAC is critical for measuring the sustainability of growth. High acquisition costs with low customer lifetime value (CLV) signal that a company is overspending to win customers. A healthy business model keeps CAC well below CLV, ensuring each customer relationship generates profit over time.
CAC also helps leaders make better investment decisions. By tracking CAC across campaigns, teams can identify which channels drive cost-effective growth and which drain resources. Investors and executives often rely on CAC as a key benchmark for assessing business efficiency.
Reducing customer acquisition cost
Companies can improve CAC by refining targeting, increasing conversion rates, and improving retention. Better alignment between marketing and sales ensures that only qualified leads are pursued. Automation and data insights also reduce wasted effort, lowering the cost of each acquisition.
Retention indirectly improves CAC as well, since satisfied customers refer new business and reduce reliance on expensive prospecting.
How Conquer helps
Conquer helps companies manage and reduce CAC by streamlining engagement inside Salesforce. Calls, emails, and tasks are logged automatically, giving leaders a complete picture of how much effort and cost go into acquiring customers.
With this visibility, marketing and sales can align on the most effective strategies, optimize campaigns, and eliminate wasted spend. Conquer makes CAC a metric teams can actively improve, not just measure.
Want to see how Conquer helps reduce customer acquisition cost and drive more profitable growth?