Glossary term
CAC (Customer Acquisition Cost)
The total sales and marketing cost to acquire one new customer; the denominator in the LTV/CAC efficiency ratio.
CAC (Customer Acquisition Cost) is the fully-loaded sales and marketing spend required to win one new customer, calculated as total sales and marketing cost divided by the number of new customers added in the period. It is the denominator of the LTV/CAC ratio and a core input to unit economics.
It matters because CAC is where go-to-market discipline shows up first. Rising CAC against a flat LTV is a classic sign that a growth model is losing efficiency: the company is paying more for customers that are worth no more than before. The companion metric, CAC payback period, expresses the same spend as the number of months of gross profit needed to earn it back.
Closelooknet reads CAC as a trend rather than a snapshot, and pairs it with sales efficiency. The AI-era question cuts both ways: automation can lower CAC by making go-to-market leaner, while a saturated market raises it as the cheap customers are used up.
In practice, $2m of sales and marketing spend that adds 200 customers gives a CAC of $10,000; set against a $30,000 LTV, that is an LTV/CAC of 3.0, around the level many investors treat as the line between efficient and subsidised growth.