Customer acquisition cost (CAC)
Marketing and sales spend to win a new customer.
Definition
Customer Acquisition Cost relates marketing and sales spend to the number of customers acquired over a period. Compared with LTV (the LTV/CAC ratio) and payback time (CAC payback), it tells whether growth is profitable.
Why it matters
When acquisition is expensive, retaining and growing the existing base becomes the least costly growth lever. This is the economic argument for Customer Success against an acquisition-only approach.
How Phano helps you
Phano strengthens revenue from the existing base (retention and expansion), often far cheaper to activate than acquisition.
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Frequently asked questions
What is Customer acquisition cost (CAC)?
Customer Acquisition Cost relates marketing and sales spend to the number of customers acquired over a period. Compared with LTV (the LTV/CAC ratio) and payback time (CAC payback), it tells whether growth is profitable.
Why does Customer acquisition cost (CAC) matter?
When acquisition is expensive, retaining and growing the existing base becomes the least costly growth lever. This is the economic argument for Customer Success against an acquisition-only approach.
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