CAC measures the total cost required to acquire a new customer, including marketing, advertising, and sales expenses. Common synonyms include: acquisition cost, cost per acquisition (CPA) (though CPA can refer to non‑customer actions), and customer acquisition spend.
Why CAC Matters
CAC is one of the most important financial and strategic metrics in ecommerce. It tells you how efficiently you’re turning investment into new customers and whether your growth model is sustainable. It helps teams understand:
- how much it really costs to grow
- whether paid channels are profitable
- how acquisition compares to customer lifetime value (CLV)
- where cross-team alignment is strong or weak
- how changes in creative, targeting, or product mix impact efficiency
A rising CAC often signals deeper systemic issues: declining traffic quality, weaker product‑market fit, increased competition, or friction in the customer journey.
How CAC Is Calculated
CAC = (Total Marketing + Sales Spend) / Number of New Customers Acquired
Example: If you spend £50,000 on acquisition efforts in a month and acquire 2,000 new customers, your CAC is £25.
Common Use Cases
- Budget planning: Understanding how much investment is needed to hit growth targets.
- Channel optimisation: Comparing efficiency across paid search, paid social, affiliates, and partnerships.
- Profitability analysis: Evaluating whether customers acquired through certain channels generate enough value.
- Forecasting: Predicting future acquisition costs and revenue.
- Strategic decision‑making: Balancing short‑term acquisition with long‑term retention and loyalty.
Related Terms
- ROAS (Return on Ad Spend)
- Customer Lifetime Value (CLV)
- CPA (Cost Per Acquisition)
- Conversion Rate
- Marketing Efficiency Ratio (MER)
- Attribution Model
What CAC Really Tells Us
When we look at CAC through a systems lens, it becomes clear that it’s not just a marketing metric, it’s a reflection of how well the entire business creates and communicates value. CAC rises when the story is unclear, when the product doesn’t resonate, when the journey is full of friction, or when teams are misaligned. It falls when the system works in harmony.
CAC is rich with intent signals. It tells us which audiences connect with the brand, which messages resonate, and where the experience breaks down. When we treat CAC as a form of empathy, a way to understand what customers need before they commit, we make smarter, more human‑centred decisions.
It also exposes cross‑functional dependencies. Marketing may drive the traffic, but merchandising shapes relevance, UX shapes clarity, and operations shape trust. If any part of the system falters, CAC climbs. Sustainable growth comes from recognising that acquisition is not a marketing problem, it’s a business‑wide responsibility.
At its core, CAC is a story about value. When teams use it not as a blunt target but as a signal, they shift from chasing cheap customers to attracting the right customers, those who stay, return, and advocate. That’s the heart of modern ecommerce: insight‑driven, empathetic, and designed for long‑term resilience.
