CAC formula customer buying

What is a CAC formula in D2C?

What is CAC?

Customer acquisition cost means your costs for a single new customer earned to your D2C store. Customer acquisition cost in ecommerce is calculated so that you combine all of your customer acquisition actions as costs and then divide them by the amount of earned new customers. The actual calculation is rather easy, but the devil is in the details. Therefore, it’s usual that a brand has few different CAC calculations being used to make sure customer acquisition is followed from multiple different aspects.

Typical starting point is to double check first what are current customer acquisition channels and if they are active. Thereafter you calculate your monthly marketing costs together, most likely from channels such as Meta, Google Ads and Tiktok or other similar sources. Then the next job is to have a look on how many new customers are coming from these channels. 

This is more tricky these days as marketing attribution is getting more complicated. Therefore an estimation is enough for the most, also post-purchase-surveys can be used to support these estimated figures. After this you have a basic CAC formula together, where you will see your customer acquisition cost per person.

As examples 6000 euros total marketing budget / 155 monthly new customers = 38,71 euros is your current CAC 

Key decisions before choosing the right CAC formula

Before proceeding with the matter you need to make two important decisions. First is that you calculate the retargeting marketing part of your CAC. This is typically only done for new customer acquisition so that customer retention has a separate calculation. Second and vital part is also to consider if other marketing activities than actual media budget should be included in your marketing costs. Traditionally in D2C space influencer marketing expenses, organic content creation etc should be included in your wide spectrum CAC calculation formula, if you want a very honest perspective. 

Last but not least some do want to calculate employment costs here, but they aren’t typically part of CAC calculations per se in D2C space. If wished you can do two versions for separate purposes.

CAC can differentiate between different markets and different customer segments, it’s typically used to calculate if customer acquisitions efforts are efficient enough and if any changes done on site and in customer acquisitions strategies have caused the costs to decrease. Typically customer acquisition costs have been raising especially on social media platforms due to increased interest in limited advertisement placements.

Where do you find CAC calculations on Ellis?

Our Ellis does support you in CAC formulation and we have been offering our customers two types of CAC calculation & estimation solutions. Basic solutions can be found from the marketing overview dashboard. Channels specific estimations can be found from the marketing channels dashboard. 

There is also the possibility to get customized CAC calculations to a custom view for further adjustment or if you as an example wish to estimate or further compare two different types of CAC formulas with each other.

Dont hesistate to reach out - We are happy to show how its done.


Written by Data Expert Mikko Rekola


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