Customer Acquisition Cost (CAC)

Calculate the total cost of winning a new customer to evaluate marketing efficiency and ensure sustainable unit economics across all channels.

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC)

definition

Introduction

Why it matters

How to apply it

Keep learning

Growth orchestration

Get a grip on what's actually working and what needs course correction. Use data and experiments to make decisions instead of opinions. See how changes in one part of the system affect everything else. Random tactics don't compound, coordinated ones do.

Explore playbooks

Tool selection

Tool selection

Select tools across your growth stack using clear evaluation criteria. Avoid common pitfalls, ensure integrations work, and build a system that scales with your business.

Customer research

Customer research

Uncover specific pain points, validate assumptions, and reveal what actually drives buying decisions. Run research that produces actionable insights, not just interesting quotes.

Quarterly strategy

Quarterly strategy

Run quarterly business reviews that assess current state, set ambitious but realistic goals, build actionable roadmaps, and define key results that keep everyone aligned.

Monthly review

Monthly review

Analyse monthly performance data across all four growth engines. Identify what is working, what is not, and make tactical adjustments using a structured decision framework.

Related books

Company of One

Paul Jarvis

Rating

Rating

Rating

Rating

Rating

Company of One

Lessons for keeping work simple and profitable. Focus on retention, systems and selective growth that preserves quality.

Related chapters

1

How to choose the right metrics

Focus on metrics that drive decisions and reveal bottlenecks. Avoid vanity metrics that look good but don't help you grow.

4

How to run monthly performance reviews

Analyse what worked and what didn't. Assess experiments, identify patterns, and decide what to double down on or cut completely.

Wiki

Competitive advantage

Identify what you do better or differently that competitors can't easily copy to defend margins and win customers consistently over time.

Sample size

Calculate how many users you need in experiments to detect meaningful differences and avoid declaring winners prematurely based on insufficient data.

Net Revenue Retention (NRR)

Track revenue growth from existing customers through expansion and contraction to prove your product delivers increasing value over time.

Growth marketing

Apply disciplined experimentation across the entire customer lifecycle, optimising every stage through rapid testing and data-driven iteration.

Workflow automation

Connect triggers to actions across systems so repetitive tasks happen automatically and teams can focus on work that requires judgement instead of admin.

Pirate metrics

Track your user journey through Acquisition, Activation, Retention, Referral, and Revenue to identify which stage constrains growth most.

Hypothesis testing

Structure experiments around clear predictions to focus efforts on learning rather than random changes and make results easier to interpret afterward.

Churn rate

Measure the percentage of customers who stop paying to identify retention problems and calculate the true cost of growth in subscription businesses.

Product-market fit

Achieve the state where your product solves a genuine, urgent problem for a defined market that's willing to pay and actively pulling your solution in.

First-touch attribution

Credit the channel that introduced prospects to your brand to measure awareness efforts and understand which top-of-funnel activities start customer journeys.

Prioritisation

Systematically rank projects and opportunities using objective frameworks, ensuring scarce resources flow to highest-impact work.

Product-led growth

Drive acquisition and expansion through product experience where users discover value before sales conversations and upgrade based on usage.

Growth plateau

Diagnose and break through stagnation by identifying which business mechanisms have reached capacity and require new approaches.

Deal stage

Define pipeline progression steps to standardise how reps advance opportunities and give managers visibility into where deals stall or convert unexpectedly.

UTMs

Track campaign performance precisely by appending parameters to URLs that identify traffic sources, mediums, and campaigns in your analytics.

Email sequence

Automate multi-touch email campaigns that adapt based on recipient behaviour to nurture leads consistently without manual follow-up from reps or marketers.

Growth drivers

Identify the fundamental factors that directly cause business expansion, concentrating resources on activities that generate measurable results.

Growth hacking

Deploy fast, low-cost experiments to discover scalable acquisition and retention tactics, learning through iteration rather than big bets.

Marketing stack

Organise the tools that capture leads, nurture prospects, and measure performance to automate repetitive work and connect customer data across systems.

Activity tracking

Log emails, calls, and meetings automatically to understand what drives deals forward and coach reps based on actual behaviour rather than guesswork.