What is CAC?
CAC stands for Cost of Customer Acquisition, or Customer Acquisition Cost. CAC helps us to determine if you are using the best options to attract new customers. If your CAC is higher than your industry’s average this is a strong indicator that you are NOT using the best channels to find & connect with potential new customers.
How do you calculate your CAC?
In case of emergency:
If no one knows your CAC & you really are unable to calculate it, err on the side of caution and assume that it is “too high”. Moving forward you will want to track this each month so that you know if your marketing strategies are actually growing your company, or killing it.
The relationship between CAC & SEO
Typically your cost of advertising drops as the amount of incoming organic traffic increases. This is why your CAC tends to decrease as your organic search engine rankings improve.
This is also why some founders get very upset when their search engine rankings are impacted.