CAC is the cost associated with acquiring new customers through marketing and sales activities.
Customer Acquisition Cost (CAC) is a metric used in product management to measure the cost of acquiring new customers. It is calculated by dividing the total cost of customer acquisition (such as marketing, sales, and customer service costs) by the number of new customers acquired. CAC is an important metric for product managers to track because it helps them understand how much they are spending to acquire new customers and how effective their customer acquisition strategies are. By tracking CAC, product managers can identify areas where they can improve their customer acquisition efforts and make more informed decisions about their product strategy.
Let's look at an example. Suppose a company spends $100,000 on marketing and advertising to acquire 1,000 new customers. In this case, the customer acquisition cost (CAC) would be $100 per customer ($100,000/1,000 customers).