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Glossary of Terms

September 18, 2018 Peter Haas Leave a Comment

Alphabetical TOC

  • Customer Acquisition Cost (CAC)
  • Cost Per Action (CPA)

Customer Acquisition Cost (CAC)

How much it costs to acquire an individual paying customer. As with most everything, you should set a time period on it.
April CAC = total marketing cost (April) / total new customers (April)

“I spent $20,000 on marketing in April and acquired 200 new customers. My CAC for April was $100”

I also like to generate a CAC per channel so that I can measure the cost of each channel. E.g. “Adwords had a CAC of $10 in April and Facebook had a CAC of $20 in April.

Further Reading:
Ometria (Beginner)
Neil Patel (Intermediate)
David Skok (Advanced)

Cost Per Action (CPA)

Cost per Action vs Cost per Acquisition

How To (Actually) Calculate CAC

LTV to CAC Ratio

Further Reading

Gross Profit

Further Reading: Investopedia

Gross Profit Margin

Further Reading: Investopedia

Return on Ad Spend (ROAS)

Revenue from a campaign or ad divided by the amount spent. Can be expressed as a dollar value or as a percent.
Revenue / cost

“I spent $100 on that Facebook campaign and it generated $500 in revenue. My ROAS was 500%. For every $1 I put in, I got $5.

Related: Return on Investmen (ROI)
Further Reading: Disruptive Advertising
See also: Customer Acquisition Cost (CAC)

Return on Investment (ROI)

The money you get divided

Related: Return on Ad Spend (ROAS)
Further Reading: Investopedia 

 

Filed Under: Digital Marketing

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