What does CAC stand for in marketing metrics?

• A. Customer Activity Cost
• B. Customer Acquisition Cost
• C. Client Acquisition Cost
• D. Cost of Advertising

Answer: (B)

CAC stands for Customer Acquisition Cost, the amount a business spends to acquire a new customer. It’s calculated by summing all sales and marketing expenses in a specific period and dividing that total by the number of new customers gained during the same period. For example, if you spend $50,000 on ads, salaries, tools, and agencies in a month and gain 200 new customers, CAC is $250 per new customer. Include costs like advertising, staff salaries for marketing and sales, commissions, software, and events, and you can allocate a share of overhead if you account for it in marketing and sales. Exclude costs tied to serving existing customers after the sale, such as ongoing support, since CAC focuses on the effort to acquire new customers. This measure is broader than “Cost of Advertising” because it captures all relevant marketing and sales expenses, not just ad spend. The term “Customer Acquisition Cost” is the standard phrasing; variations like “Client Acquisition Cost” are uncommon, and “Cost of Advertising” misses the broader scope of the acquisition effort.