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The cost to acquire a new customer, including marketing and sales expenses. To calculate CAC, sum all the expenses associated with converting prospects into customers (such as marketing and sales personnel costs) and divide that sum by the total number of customers gained. For instance, if Streamline AI spends $100,000 on marketing and acquires 50 new clients in a year, the CAC is $2,000. A lower CAC is preferable for a business, as it indicates a reduced cost for each new customer added.
CAC is a vital metric for understanding a company's return on investment in its efforts to expand its customer base. It serves as an indicator of the effectiveness of the company's marketing and sales.
