Leedlime
Customer Acquisition Cost (CAC): Definition & Guide
Customer Acquisition Cost (CAC) is the total cost of winning a customer to purchase a product or service.
Definition
The total amount of money a business spends on sales and marketing to acquire a new customer over a specific period.
How to Calculate CAC
The formula for CAC is simple: Total Sales + Marketing Expenses / Number of New Customers Acquired = CAC
Why CAC Matters for SaaS
If your CAC is higher than the Lifetime Value (LTV) of your customer, your business model is unsustainable. A common benchmark for healthy SaaS companies is an LTV:CAC ratio of 3:1.
Ways to Lower CAC
- Content Marketing: Generate organic leads instead of relying solely on paid ads.
- Social Selling: Use tools like Leedlime to find high-intent leads more efficiently.
- Referral Programs: Leverage existing customers to acquire new ones.