CAC or Customer Acquisition Cost

To refresh your memory - or introduce the concept - I am going to explain what a CAC or Customer Acquisition Cost is and it’s importance. Then we will take a look at a simple example that will help you understand the concept better
CAC Cost of Customer Adquisition
Once we know how much it costs us to obtain the first customer through a digital channel, we can compare it with the return generated by that client. For example, let’s say that we have launched an SEM campaign and our ad appears in the top positions of Google, where each click costs us $ 1.50 CPC (cost per click). We need to impact 20 people so that one of them ends up buying on our website or app. The cost of obtaining said client has been:
CAC = 20 clicks * $ 1.50 CPC = $ 30
In terms of digital marketing, this is known as the Cost of Customer Acquisition or Cost of Customer Acquisition (CAC).

Is my CAC too high?

To answer this question, it is important to contextualize it with the return you get from each client. In other words, if you have a CAC of $ 30 as in the example above, and you sell products for around $ 10 and your customers do not buy from you on a recurring basis, it is evident that you have a very high CAC. Let’s say that you sell these same products, however, you know that the average customer buys from you more than 5 times a year, you then have a CAC that can be sustainable. If you are in this scenario, you will ask yourself, how much do I have to spend on digital marketing campaigns. To answer this question we must consider factors such as the Life Time Value, or the Customer’s Life Value LTV, Return on Investment, Return on Investment ROI, and the Rotation Rate or Churn Rate. Click the following link to learn step by step what you have to do in order to understand exactly how much you have to spend.
 

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