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Business Dictionary

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Customer Acquisition Cost (CAC)

The cost incurred to acquire a customer and maintain a relationship is known as the CAC or Customer Acquisition Cost. This is an important business performance measure. The lower your CAC is the higher your ROI or Return On Investment will be.

The CAC is usually calculated as the total amount of money you spend in acquiring a customer, typically in the form of all advertising and marketing spends divided by the number of customers you have. But the real value of your CAC is relative to how much revenue you earn from each of the customers. For example, if you have spent an X amount to acquire a customer and the revenue / customer you have received is a high multiple of the CAC then you are enjoying a healthy ROI . If however, the revenue is a very low multiple of the CAC, then you have to work on bringing the CAC down or increasing the revenue / customer.

There are many features available on your Shopmatic Webstore to help you keep your CAC low even as you improve your ROI. You can easily link your Shopmatic Webstore to your Google Analytics account to track and understand the CAC of your online business. Engaging in organic, unpaid marketing activities such as frequent, engaging brand communication on your social media handles and increasing the conversion rate are also ways to keep your CAC in control. Finally, you can also use our integrated, AI (Artificial Intelligence) driven digital marketing tool of Onlinesales.ai to run digital ads at a very low cost.

With Shopmatic, when you sell using the multiple sales channels we offer like chat tools, social media channels and marketplaces, you can monitor and calculate the CAC you are getting across each channel option.

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