Customer Acquisition Cost

Definition

The cost associated with acquiring a new customer.

Information

Customer acquisition cost is calculated by dividing total acquisition expenses by total new customers. However, there are different opinions as to what constitutes an acquisition expense. For example, rebates and special discounts do not represent an actual cash outlay, yet they have an impact on cash (and, presumably, on the customer).

Acquisition costs vary across industries and mediums. When acquisition data is available, try to determine if you are comparing apples to apples, so to speak. This is not always easy, as customer acquisition data can be scarce, and the methodology is often sketchy.


Synonyms

often shortened to acquisition cost

Related Terms

conversion rate, cost-per-action (CPA), cost-per-click (CPC), CPM

Sites

n/a

Articles

With Customers, Quality Is Job One
ClickZ (June 27, 2001)

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