E-commerce Glossary

CAC (Customer Acquisition Cost)

Total cost to acquire a new customer.

CAC represents the investment needed to convert a prospect into a paying customer. Formula: CAC = Acquisition Spend / Number of New Customers. With $5,000 invested for 100 new customers, your CAC is $50. A healthy CAC should be well below LTV. If your CAC exceeds one-third of LTV, your business model is in danger.

Related terms

AOV (Average Order Value)Average amount spent per order in your store.See definition ARPU (Average Revenue Per User)Average revenue generated per user over a given period.See definition Blended CACAverage acquisition cost including all marketing channels.See definition Blended ROASOverall return on all advertising spend combined.See definition Churn RatePercentage of customers lost over a given period.See definition CLV / LTV (Customer Lifetime Value)Total value a customer generates over their entire relationship.See definition

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