What is eCommerce Customer Acquisition Cost?
Customer Acquisition Cost (CAC) is the total money a business spends to acquire a new customer. It’s a crucial metric for eCommerce businesses as it helps them understand the efficiency of their marketing and sales efforts.
How to Calculate Customer Acquisition Cost?
CAC is calculated by dividing the total cost of sales and marketing expenses by the number of new customers acquired over a specific period.
Customer Acquisition Cost Formula:
CAC = Total Cost of Sales + Total Cost of Marketing / Number of New Customers Acquired
Example of CAC Calculation
Let’s say an eCommerce store spends $10,000 on marketing and sales efforts monthly. During that same period, they acquire 200 new customers.
CAC = $5,000 + $5,000 / 200 = $50
This means the company spent $50 to acquire each new customer.
To easily calculate your customer acquisition cost, check out our Customer Acquisition Cost Calculator for quick and accurate insights.
What is a Good Customer Acquisition Cost?
A good Customer Acquisition Cost is significantly lower than your Customer Lifetime Value (LTV).
This means that for every money you spend to acquire a customer, you should generate multiple money in revenue over their lifetime
How to Improve Customer Acquisition Cost?
- Focus marketing efforts on high-value customers.
- Prioritize marketing channels with high ROI.
- Improve conversion rates and website/landing page performance.
- Retargeting with potential customers.
- Build Strong Brand Awareness that increase organic reach and credibility.
- Improve Customer Retention
- Track CAC regularly and make data-driven decisions.
What Factors Affect Customer Acquisition Cost?
- Advertising costs (PPC, social media, etc.)
- Sales team salaries and commissions
- Marketing technology costs
- Competition intensity
- Customer demand
- Pricing strategy
- Product differentiation
- Value proposition
- Customer lifetime value (LTV)
“Don’t just chase customers; attract them. Find out what they truly want, then give it to them. That’s the smartest way to spend your money.”
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