Product metrics and goals
Customer acquisition cost (CAC)
Also called CAC, Cost per acquisition, Cost per install
What it costs, on average, to win one new paying customer: the sales and marketing spend divided by the customers it brought in.
How it's worked out
Sales and marketing spend ÷ new paying customers, over the same period
CAC tells you whether growth is affordable. On its own the number means little; it matters next to how much a customer is worth, which is why it's usually read with lifetime value and payback period.
Count the whole cost of winning customers: ads, tools, salaries of the people selling and marketing. A CAC that leaves out salaries flatters a sales-led business.
In practice
A company spends $48,000 on sales and marketing in a month and wins 96 new customers: its CAC is $500.
Common mistake
Dividing by sign-ups or trials instead of paying customers. That's cost per lead, a different and much smaller number.