Definition:

Customer acquisition cost or CAC is the amount spent on acquiring a customer.

Example:

You spend $10,000 on influencer marketing, and gain 100 new customers through the campaign. Your customer acquisition cost equals $10,000 / 100 = $100.

Why it matters:

Promoting your business to potential customers is important to build a loyal, returning customer base. Tracking customer acquisition cost helps evaluate which marketing strategies appeal to your target audience.

It is important that the amount you expect to earn from customers (over the lifetime of their relationship with you) is much greater than their acquisition cost otherwise no matter how many customers you bring in, you will never make any money.