Customer acquisition cost is a metric for calculating how much a business spends to acquire a customer.
For example, a business spends $12,000 per month on marketing (ads, sales staff, and promotions) and acquires 40 new customers — making its customer acquisition cost $300 per customer. If those customers spend an average of $1,800 per year, the payback period is about 2 months.
Why it matters: If the cost to acquire a customer exceeds their lifetime value, the business model is fundamentally unsustainable.
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