What is CAC?

Definition

Customer Acquisition Cost is the total cost of sales and marketing required to acquire one new paying customer. Healthy businesses generally aim for a CAC payback period under 12 months.

Why it matters

Understanding CAC is foundational to working in analytics. It shapes how teams plan, communicate with stakeholders, and interpret performance.

Best practices

• → Define it in shared documentation so every team uses the same meaning.
• → Tie it to a measurable outcome rather than treating it as an end in itself.
• → Revisit assumptions quarterly — the meaning and benchmarks evolve.

Common mistakes

• → Treating it as a vanity metric instead of a decision input.
• → Copying competitors' targets without context for your funnel.
• → Optimizing it in isolation, hurting downstream conversion.