What are the components involved in calculating Customer Acquisition Cost?

Customer Acquisition Cost (CAC) is a key metric that helps businesses understand the total expenses associated with acquiring a new customer. The correct components for calculating CAC specifically include marketing expenses and sales expenses.

Marketing expenses encompass the costs related to promotional activities aimed at attracting new customers, such as advertising campaigns, public relations efforts, and digital marketing strategies. Sales expenses include costs incurred by the sales team, such as salaries, commissions, and any expenses tied to the sales process, including tools and software used to manage customer relationships and track leads.

By combining both marketing and sales expenses, a business can effectively calculate the total cost involved in acquiring a new customer. This figure can then be divided by the number of new customers gained in a specified period, providing a clear average cost that can be analyzed and optimized over time.

The other options do not adequately represent the components involved in calculating CAC. For instance, sales and customer feedback, total revenue and total costs, as well as customer reviews and advertising reach do not contribute directly to the measurement of the expenses related to acquiring customers. Instead, they involve other aspects of business operations and customer engagement that are not specifically focused on acquisition costs.