Marketing & Sales Metrics

CAC (Customer Acquisition Cost)

Total marketing + sales spend divided by new customers acquired — measures how much it costs to bring in one customer.

Formula: CAC = (Total marketing + sales spend) / (New customers acquired in same period). Period is usually monthly or quarterly.

For Indian SMBs running performance ads, CAC includes ad spend, agency fees, sales staff salaries, and tools. Most SMBs forget tools and salaries, undercounting CAC by 20-40%.

Healthy CAC depends on LTV (Lifetime Value). Ratio of LTV:CAC of 3:1 is the classic benchmark — meaning a customer's lifetime value should be at least 3x acquisition cost. Below 1:1 means you're losing money per customer.

India context

Indian SMB CAC is typically lower than US/EU (lower ad costs) but so is LTV. A salon spending ₹50/customer on Meta ads with average LTV of ₹3,000 has a healthy 60:1 ratio. A SaaS spending ₹2,000/customer with LTV of ₹4,800 has a 2.4:1 ratio — sustainable but tight.

Examples

  • A clinic spends ₹50,000 on Meta ads, gets 100 new patients = ₹500 CAC.
  • A D2C brand at ₹2L ad spend, 200 new customers = ₹1,000 CAC.

FAQ

Should I include retention costs in CAC?

No — CAC is acquisition only. Retention is a separate metric (cost to retain). Mixing them creates confusion.

Why is my CAC rising?

Common causes: ad costs going up (auction inflation), poor creative fatigue, broader audience targeting, sales-team scale costs. Diagnose with channel-level breakdown.

What's a good LTV:CAC ratio?

3:1 is benchmark. 1:1 = breakeven. Below 1:1 = losing money. Above 5:1 = under-investing in acquisition (you could grow faster).

Related concepts

LTVROASCTRlead formCTWA

Doggu handles CAC (Customer Acquisition Cost) compliance for you.

Whether it's automating the workflow above, Doggu was built specifically for the Indian SMB regulatory environment. One platform, all the requirements.

Try Doggu free for 14 days

Related glossary entries

Click-to-WhatsApp (CTWA) — Ad format on Meta (Facebook + Instagram) that opens a WhatsApp chat directly when clicked — a primary lead-gen channel for Indian SMBs.LTV (Lifetime Value) — Total revenue (or profit) one customer generates over their entire relationship with the business.ROAS (Return on Ad Spend) — Revenue generated per rupee of ad spend — direct measure of advertising efficiency.

More in Marketing & Sales Metrics

LTV (Lifetime Value)ROAS (Return on Ad Spend)MRR (Monthly Recurring Revenue)AOV (Average Order Value)RTO (Return to Origin)GMV (Gross Merchandise Value)ChurnMQL (Marketing Qualified Lead)
← All glossary entriesBlogWhatsApp TemplatesFree tools