customer-acquisition-cost

Vocabulary Word

Definition

In business, 'Customer Acquisition Cost' (CAC) is the sum of all the money you spend on sales and marketing to gain a new customer. It’s a way to measure how much you're investing to grow your customer base.

Examples in Different Contexts

In social impact startups, 'customer-acquisition-cost' can measure outreach effectiveness. A social entrepreneur might state, 'Our community workshops have significantly lowered our CAC, reaching more individuals in need.'

Practice Scenarios

Tech

Scenario:

The new software update seems to be driving more users to our premium subscription, which could lead to increased revenue.

Response:

Then we should compare the revenue from the new premium subscriptions to the customer acquisition cost. This way we can ensure if the update was financially beneficial.

Business

Scenario:

Our spending on marketing has significantly increased over the last quarter, which may affect our profitability.

Response:

We should calculate our Customer Acquisition Cost to assess if the increase in marketing spending is justified.