Which metric measures the cost to acquire a new customer?

• A. Return on Investment
• B. Customer Acquisition Cost
• C. Customer Lifetime Value
• D. Churn Rate

Answer: (B)

Customer Acquisition Cost tracks how much you spend to bring in a new customer. It combines all sales and marketing expenses during a period and divides that total by the number of new customers gained in that same period. This directly answers the question of cost per new customer and is the metric used to gauge how efficiently your marketing and sales efforts convert spend into new customers. For example, spending $10,000 in a month to gain 200 new customers yields a CAC of $50 per customer. Other metrics describe different ideas: ROI focuses on overall profitability of an investment, Customer Lifetime Value estimates how much revenue a customer will generate over their relationship, and Churn Rate measures how quickly customers stop using your product.