CAC (customer acquisition cost)
CAC is the fully loaded cost of acquiring one new customer: ad spend plus the sales and marketing costs attributable to new business, divided by new customers only.
Both terms of the ratio are commonly flattered. The numerator gets understated by counting only ad spend (leaving out salaries, tools, agency fees, creative production); the denominator gets inflated by blending returning customers in — which can halve reported CAC while the true cost of acquiring a stranger climbs unwatched.
Paid-only CAC is useful for channel decisions; fully loaded CAC is what payback and LTV:CAC must use, because it is what the business actually spends. Track marginal CAC by spend tier as well as the average: an account can report a healthy blended CAC while its last increment of spend converts at double the allowable rate.
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