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Customer Acquisition Cost (CAC) is an important marketing metric and ratio that’s commonly used in digital marketing (and direct marketing) to aid in the analysis of customer acquisition campaigns. CAC is most commonly used in web, software, or internet businesses, especially companies with a SaaS (software-as-a-service) revenue model.
CAC helps marketers determine the following:
1. Can this marketing channel or campaign scale?
2. Is this marketing campaign acquiring customers profitably?
3. Are we spending too much to acquire customers with this tactic or channel?