Definition
The total cost — marketing, sales, ops — to acquire one new customer. CAC vs. CLV is a core unit-economics ratio; healthy businesses recover CAC well within the customer lifetime.
Why it matters
Knowing what it truly costs to land a new customer is what tells an owner whether marketing and sales spend is building the business or bleeding it. The number only means something in relation to how much that customer is worth over time; spending freely to acquire customers who don't stick around is a fast way to grow revenue while losing money. Watching acquisition cost against lifetime value keeps growth from becoming an expensive habit.