CAC is the cost of acquiring a new customer. It includes all of the expenses associated with attracting, converting, and retaining a customer. These costs can include marketing expenses, sales commissions, and any other expenses incurred to generate a sale.
CAC is important, because it can help companies determine the effectiveness of their marketing and sales strategies. By understanding how much it costs to acquire a customer, companies can evaluate the profitability of their customer acquisition efforts and adjust their strategies accordingly. CAC can also help ecommerce companies compare the costs of different marketing and sales channels, allowing them to make informed decisions about where to invest their resources.
One way that CAC can be calculated is by dividing the total amount spent on marketing by the number of orders as follows:
CAC = Paid Marketing Expense / Number of Orders