CAC tells you what it costs to land one customer. It is a simple ratio, but the inputs are easy to game: do you include the salaries of the team running the campaigns? The tools? The agency fees? Define the formula once and stick with it.
For agencies advising clients on growth, CAC is the headline number in nearly every board deck. Be ready to break it down by channel, by cohort, and by tenure — averages hide everything that matters.
CAC only means something next to LTV (lifetime value). A CAC of $500 is great if customers stay for years, terrible if they churn in a month. The pair, not the figure, is the story.