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What is CAC or Customer Acquisition Cost?

By Scott Max

The Customer Acquisition Cost or CAC is the economic investment we have made to get a potential consumer to become a final convert and purchase our product or service. It is a metric applicable to the different areas of online marketing: SEO, SEM, emaling.

This video will help explain the concept:

How is the Cost of Customer Acquisition calculated?

To calculate the cost of customer acquisition, we have to divide the total amount spent on marketing to gain customers by the number of customers gained from that investment.

In this way, for example, the real value of a customer who has made a purchase from us for 50 euros in our e-commerce is not 50 euros, but the value of their purchase minus the amount we have invested in getting them to convert. This formula is only made the first time he buys. The next times you do it (if we haven't made any specific investment for it), the customer's value will be equal to the amount of your purchase.

In this sense, to calculate with some foresight the cost of customer acquisition that we can afford in a campaign we will have to take into account what is the average purchase value of our customers. That is, how much they usually spend on average.

This is because if, for example, we are a decoration store and our customers spend on average about 30 euros, it doesn't make sense that our customer acquisition cost is 20 euros. On the other hand, it would make sense to invest that if what we sell are luxury cruises on the Nile and the average purchase value is 3,500 euros.

Therefore the CAC or cost of customer acquisition is an effective metric to assess how much we can spend on customer acquisition.

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