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Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC)

Noun

Customer acquisition cost (CAC) refers to the expense incurred by a B2B SaaS company to secure a new customer. This includes all costs associated with sales and marketing efforts, including advertising, content creation, events, salaries, commissions and technology investments. Additionally, CAC can include expenses related to partner programs, such as referral fees or co-marketing initiatives.

Calculating customer acquisition cost involves dividing the total sales and marketing costs by the number of new customers acquired within a specific timeframe, providing insights into the efficiency and effectiveness of a company's customer acquisition strategies. In the context of B2B partnerships, CAC takes on additional significance, as when a customer is acquired through a partner channel, the CAC is typically lower compared to customers acquired through traditional marketing channels due to shared marketing efforts, existing trust and qualified leads.

By using partnerships, B2B SaaS companies can optimize their CAC and improve their customer acquisition efficiency. However, it is important to track and analyze CAC for both direct and partner-acquired customers to make informed decisions about resource allocation and optimize overall customer acquisition strategies.

Example:

Claud's software company, in an effort to lower their customer acquisition costs, started an affiliate marketing partnership program.

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