What is Client Acquisition Cost?
The Client Acquisition Cost (CAC) refers to the ratio between total marketing and sales budgets and the number of converting prospects. CAC gives a rough estimate of the average investment a company has to make in order to close a deal.
What is the purpose of calculating Client Acquisition Cost?
Calculating your Client Acquisition Cost is essential for determining the ROI of your marketing efforts. Investing time to analyze your CAC can also reveal misspending and budgetary inadequacies your marketing and sales departments may be suffering from.
How does Client Acquisition Cost work?
The most traditional way of calculating Client Acquisition Cost is by dividing the gross marketing and sales investments by the number of converting prospects for the same period of time. Individually, this cost may vary, but this calculation offers an average value that may prove useful in planning future campaigns.