What is Customer Acquisition Cost?

Acquisition cost is the budgeted amount for acquiring a customer. It differs from the CPL or cost per leat metric in that it encompasses more than just generating the visitor’s buying interest of the product. It actually calculates the cost of acquiring them as a customer, via a purchase.

Why is it important?

The cost of acquisition for any business, whether it is eCommerce or something else, is often thought to be one of the most significant metrics. This can be a difficult concept, but customer acquisition cost often correlates to profitability as the action is taken has a direct correlation with revenue.

Additionally, customer acquisition cost (CAC) provides a full picture of ROI by measuring the effects of advertising as well as marketing and sales, which cost per lead does not.

Moreover, that significant fluctuation in the cost of customer acquisition will occur at any time and especially early on in advertising campaigns. If you have spent large sums of money on acquisition but need a long purchase cycle, the cost of customer acquisition won’t be actionable until your typical length of the purchase cycle has been met.