CAC is compared with LTV. A healthy business acquires customers for less than their long-term value.
What it means in practice
CAC (Customer Acquisition Cost) is the cost of acquiring one customer: total marketing and sales spend in a period divided by the number of new customers.
Why it matters for your business
CAC is compared with LTV. A healthy business acquires customers for less than their long-term value. When CAC rises, look for cheaper channels or improve conversion.
Examples and good practice
- Count all costs: ads, commissions, materials, time.
- Compare CAC across channels.
- Aim for an LTV:CAC ratio of at least 3:1.
- Lower CAC with a better website and referrals.
How to use it in a sales conversation
For a business owner a good website is a way to lower CAC: instead of paying for every click, it wins customers from Google, AI and referrals. It’s an argument that works well in conversations.
