Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) is a business measure that shows how much money a company spends to get one new customer. Think of it like a receipt that adds up all the marketing and sales costs needed to convince someone to buy something. For online marketplaces and e-commerce businesses, this includes things like advertising costs, marketing team salaries, and promotional discounts. Companies use CAC to make sure they're not spending more money getting customers than these customers will bring in through their purchases. It's often mentioned alongside other terms like ROI (Return on Investment) and LTV (Lifetime Value) in business planning.
Examples in Resumes
Reduced Customer Acquisition Cost by 40% through targeted social media campaigns
Implemented strategies that lowered CAC while maintaining customer quality
Analyzed Customer Acquisition Costs across multiple channels to optimize marketing budget
Typical job title: "Growth Marketing Managers"
Also try searching for:
Where to Find Growth Marketing Managers
Online Communities
Professional Networks
Example Interview Questions
Senior Level Questions
Q: How would you develop a strategy to reduce CAC while maintaining customer quality?
Expected Answer: A strong answer should discuss analyzing current marketing channels, implementing A/B testing, using data to identify most profitable customer segments, and balancing acquisition costs with customer lifetime value.
Q: How do you calculate and interpret CAC in relation to customer lifetime value (LTV)?
Expected Answer: Should explain that CAC should be compared to how much revenue a customer generates over time (LTV), and that healthy businesses typically aim for an LTV:CAC ratio of 3:1 or better.
Mid Level Questions
Q: What metrics would you track alongside CAC to measure marketing effectiveness?
Expected Answer: Should mention conversion rates, customer lifetime value, return on ad spend, customer retention rates, and how these metrics work together to show the full picture of marketing performance.
Q: How would you optimize CAC across different marketing channels?
Expected Answer: Should discuss tracking costs per channel, measuring conversion rates, A/B testing, and adjusting budget allocation based on performance data.
Junior Level Questions
Q: How do you calculate Customer Acquisition Cost?
Expected Answer: Should explain that CAC is calculated by dividing total marketing and sales costs by the number of new customers acquired in a given period.
Q: What marketing channels typically have the lowest CAC?
Expected Answer: Should discuss organic channels like social media, content marketing, and email marketing, versus paid channels like advertising, and understand basic cost differences.
Experience Level Indicators
Junior (0-2 years)
- Basic understanding of marketing metrics
- Experience with social media marketing
- Knowledge of Google Analytics
- Basic data analysis skills
Mid (2-5 years)
- Advanced campaign tracking
- Multi-channel marketing experience
- Budget management
- A/B testing implementation
Senior (5+ years)
- Strategic marketing planning
- Advanced analytics and reporting
- Cross-functional team leadership
- Marketing automation expertise
Red Flags to Watch For
- Unable to explain basic marketing metrics
- No experience with data analysis tools
- Lack of understanding of different marketing channels
- No experience with budget management
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