What's the difference between CPA and CAC?

CPA (Cost Per Acquisition) and CAC (Customer Acquisition Cost) are related but distinct metrics used to evaluate the cost-effectiveness of acquiring customers.

Here's the difference between the two:

CPA (Cost Per Acquisition): CPA measures the average cost incurred to acquire a single customer or convert a lead into a paying customer. It calculates the cost associated with each specific acquisition or conversion action. CPA is typically calculated by dividing the total cost of a specific campaign or marketing channel by the number of acquired customers or conversions generated from that campaign or channel.

CAC (Customer Acquisition Cost): CAC represents the overall cost incurred by a business to acquire new customers over a specific period. It takes into account all the costs associated with acquiring customers, including marketing and sales expenses, advertising costs, salaries, commissions, technology costs, and any other relevant costs. CAC is calculated by dividing the total acquisition costs (including all relevant expenses) by the total number of customers acquired during the same period.

In summary, the main difference between CPA and CAC is the scope of measurement. CPA focuses on the cost of acquiring a single customer or conversion, typically associated with a specific campaign or channel. On the other hand, CAC provides a broader view by considering the overall cost of acquiring customers, encompassing all relevant expenses incurred by the business over a specific period. CAC provides a more comprehensive understanding of the total investment required to acquire customers, while CPA offers insights into the efficiency and cost-effectiveness of specific marketing campaigns or channels.