This is a customer acquisition cost guide. For a stated period, customer acquisition cost (CAC) is the acquisition spend included in your scope divided by the number of customers acquired in that period.
Unpaid traffic is not free work
The original article described how our business attracted enquiries through search and social participation. Even without buying the placement, that work used time and software.
Count those resources when judging whether a channel is worthwhile. Otherwise, an apparently free source of customers can hide a substantial operating cost.
Agree the scope before comparing
Be explicit about what the calculation includes. Marketing acquisition cost is not the same as total cost of goods sold or the full cost of running the business. Keep the reporting period and included costs consistent.
A lead is not a completed sale. If you compare campaigns using cost per lead, also check lead quality and how many become customers. If you compare cost per acquired customer, use a consistent definition of acquisition and account for the delay between enquiry and purchase.
Set a commercially useful limit
The amount you can afford to acquire a customer depends on the margin and the business model. Do not borrow another industry’s historical lead price or assume that more sales automatically mean more profit.
Use the same scope and period when comparing channels, and document which acquisition costs you included. Then ask what you are spending, what you are getting, and whether it makes sense for the business.
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