Customer Acquisition Cost (CAC) is a metric that measures the total cost of acquiring a new customer. This includes expenses related to marketing, sales, and any other resources used to attract and convert potential customers. Understanding CAC helps businesses evaluate the effectiveness of their marketing strategies and budget allocation. A lower CAC indicates that a company is efficiently acquiring customers, while a higher CAC may suggest the need for improved marketing tactics. Companies often compare CAC to the Customer Lifetime Value (CLV) to ensure that the investment in acquiring customers is justified by the revenue those customers generate over time.