Customer Acquisition Cost (CAC) measures how much, on average, it costs to acquire a new customer. When compared to the Annual Contract Value (ACV) of newly acquired customers, it provides another lens into sales efficiency.
For monthly aggregation, new customers acquired in a month are compared to S&M spend for the prior month to account for the lag between sales and marketing activities and a customer producing revenue. For month y (eg January 2022):
Note that for the first month of data in the Metric Source, month y S&M is used to calculate CAC, as there is no earlier data.
For quarterly and annual aggregation, new customers acquired are compared to S&M expenses from the same period, since the quarter or year the customer starts producing revenue will likely be the same one where most of the sales and marketing activities occurred. For example, for quarters:
For quarterly and annual aggregation, the New ACV formula is applied using revenue from the last month of the period.