Commercial
Customer Acquisition Cost (CAC)
Also known as: CAC, cost of customer acquisition, acquisition cost per customer
The total cost of acquiring a new customer — marketing spend, sales compensation, and overhead divided by the number of new customers in the period. A business that cannot produce this number cannot prove its growth is investable.
WHY IT MATTERS
Why it matters. Buyers model future growth as a function of demonstrated, repeatable capacity. CAC is the metric that makes growth investable — it tells the buyer how much capital is required to produce each incremental customer. A business with a known CAC of $2K and a known LTV of $26K has a ratio that justifies aggressive post-close investment. A business that has never measured CAC is a business where growth has been incidental, driven by the founder's network or market timing rather than a system the company owns. During commercial diligence, the absence of CAC data signals that the customer acquisition motion is informal and likely founder-dependent — which means the growth rate the founder produced may not survive the founder's departure.