CAC stands for customer acquisition cost — it’s a metric your CEO obsesses over.
In other words, your CAC is the total sales and marketing cost required to acquire a new customer over a given time period. That time period could be a week, a month, a quarter, or even a year.
The total sales and marketing cost includes all the program and advertising spend, salaries, commissions, bonuses, and overhead.
Let’s say Sales and Marketing spent $400,000 last quarter, and you acquired 40 new customers. Your CAC is $10,000:
$400,000/40 customers = $10,000/customer
And that’s it!