- profitability
- acquisition
- method
How to lower your customer acquisition cost (CAC) without cutting advertising
CAC is what a new customer costs you. How to calculate it honestly, and the levers that really bring it down, from the click all the way to the signed contract.
Published on · Joh · 6 min read
Customer acquisition cost, or CAC, is what you spend to get a new customer. It is the number that says whether your growth is profitable. And contrary to what people think, you rarely lower it by cutting the budget.
The calculation
CAC = acquisition spend ÷ number of new customers.
The question is what goes into spend. The honest version counts everything: advertising, the provider's fees, video production.
A real example: at a kitchen fitter I work with, €10,000 of advertising over five months brought 15 signed kitchens, about €667 of advertising per kitchen. Fees included, total investment was €21,800, about €1,450 per kitchen, for an average sale of €11,000. The full case.
What to compare it with
What a customer brings in. CAC is neither good nor bad in itself: €1,450 is excellent for an €11,000 kitchen at 38% margin, ruinous for a €300 service. The cost of a signed job.
The levers, from click to signature
1. The creative. A video that stops the right audience lowers the cost of every enquiry, often far more than an audience setting. Six hook mechanics.
2. The page's conversion rate. Going from 3% to 6% of visitors requesting a quote halves the cost of each enquiry. The landing page.
3. Enquiry quality. One or two qualifying questions in the form lower volume but raise the signing rate. Qualifying enquiries.
4. Call-back speed. An enquiry called back within minutes converts far better than one called back the next day. It is often the cheapest lever of all.
5. Tracking all the way to the sale. If campaigns optimise for forms, they look for people who fill in forms. Reporting real sales teaches them to look for buyers. The conversions API.
6. The average sale. Raising the value of a sale lowers relative CAC without touching advertising: options, bundles, upgrades.
What not to do
- Cut the budget below the learning threshold. Campaigns become unstable, and CAC rises.
- Judge by cost per click or per lead alone. A cheaper lead that never signs raises CAC. Cost per lead.
- Change everything at once. You then can't tell what worked.
Further reading: Increasing campaign ROAS and ROAS, its calculation and threshold.
Want to know your real acquisition cost? . We work it out together, advertising and fees included.