CAC is the average cost to acquire one new customer, including marketing and sales spend divided by the number of new customers.
CAC (Customer Acquisition Cost) measures how much it costs to bring in a new customer: total marketing and sales spend over a period divided by the number of new customers acquired in that same period.
CAC is usually weighed against LTV (customer lifetime value): a healthy ratio is at least 3:1, meaning a customer generates at least three times the acquisition cost over the relationship.
Good customer service indirectly lowers effective CAC: satisfied customers generate word-of-mouth and positive reviews, attracting new customers without extra ad spend.
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