Customer acquisition cost expresses how much a company spends on average to acquire one new paying customer. It is calculated as total marketing and sales costs for a period divided by the number of new customers in the same period. The costs include not only the media budget but also people's work, tools and sales commissions, otherwise the figure comes out too optimistic. The value on its own says nothing until it is compared with customer lifetime value – a healthy ratio means that the customer's contribution significantly exceeds the cost of acquiring them, and that the investment pays back within an acceptable time. It is worth tracking by channel and segment, because an average conceals channels that bring in customers at a significantly high cost.
See also: Customer lifetime value (CLV), ROAS and Advertising Cost of Sales (ACoS), Company marketing budget.
