CAC (Customer Acquisition Cost)
CAC is not the cost of a campaign. It's the full, all-in price a company pays to turn a stranger into a paying customer.
“Companies that optimize CAC in isolation end up buying cheaper and cheaper, less and less profitable customers.”
Otto GTM ObservatoryWhy CAC alone is misleading
CAC measures acquisition efficiency, not the quality of the acquired customer. Two companies with the same CAC can have opposite outcomes: one acquires enterprise customers with 118% NDR, the other acquires SMBs that churn within 8 months.
In a mature B2B GTM model, CAC is broken down by channel and ICP segment. An average CAC hides channels that lose money and channels that generate margin, with the effect of continuing to invest exactly where value is destroyed.
Anti-patterns
The most common mistake is calculating CAC using only ad spend, forgetting sales salaries, tools, commissions, and marketing overhead. The resulting number is systematically underestimated, often by half.
The second mistake is comparing CAC across channels with different sales cycles without normalizing for time: an enterprise outbound channel will always show a higher nominal CAC than a self-service channel, but that doesn't mean it's less efficient over time.
Practical Application
A B2B SaaS company with €340,000 in combined marketing and sales spend in one quarter and 62 new customers acquired records a CAC of €5,483. Segmented by channel, enterprise outbound shows a CAC of €11,200 but an LTV of €84,000 (7.5x ratio), while inbound self-service has a CAC of €1,900 but an LTV of only €5,700 (3x ratio): both are valid, but require opposite investment strategies.