Average Customer Acquisition Cost (CAC) by Industry: B2C Edition
Last updated: September 20, 2023
B2C businesses seeking growth use the Customer Acquisition Cost (CAC) metric to compare lead generation channels and decide where to allocate their marketing investment. Across industries, CAC is regarded as one of the most important metrics for marketers to track, as it can be combined with Customer LTV to evaluate marketing sustainability.
Our team compiled data from 103 of our agency’s B2C clients between 2018 and 2023, calculating the CAC they received from their marketing channels and categorizing them as either Organic or Paid. We then averaged CACs from organic channels and paid channels separately, segmenting them by industry. The results are in the table below.
First, some definitions:
- Customer Acquisition Cost is calculated by dividing Total Marketing and Sales Spend by Total New Customers for a given period of time. It can be calculated on a monthly, quarterly, or annual basis. Our client data uses annual CAC, minimizing the impact of seasonality in consumer purchasing habits. This is shown in the formula below:
- The chart below divides CACs into two types: Organic CAC and Paid CAC. Our organic CAC data is gathered primarily from two channels: SEO and Organic Social. Our paid CAC data consists of PPC / SEM and Paid Social. We do not include email marketing, direct mail, outdoor advertising, or other marketing channels in this analysis due to the constraints of our B2C data set.
|To learn more about how choice of marketing channel impacts CACs, see our report on Average CAC by Channel.|
- Our data is drawn from anonymized client analytics. The organic CACs are therefore weighted more heavily toward SEO (as one of the main services we provide).
Average Customer Acquisition Cost (CAC) By Industry
Below are the average CACs in 20 B2C industries, broken down into Organic and Inorganic for each industry.
|Industry||Average Organic CAC||Average Paid CAC|
|Higher Education & College||$134||$177|
|Hotels & Resorts||$208||$247|
Interpreting Your CACs
While CAC provides your team with insight into how much you do spend to acquire each customer, by itself it doesn’t tell you how much you should spend. The above averages will give you an idea of a reasonable CAC for your industry, but differences in product pricing and target market make it a rough estimate at best. This is why your team should also calculate the average lifetime value (LTV) of each customer. The simplest way to do so is by dividing your monthly or annual profit by the number of unique customers you have in that time period, then multiplying this number the the average number of years a customer continues to purchase your products.
Dividing your LTV by your CAC gives you your LTV to CAC ratio, which estimates the efficiency of your marketing spend. Most companies should aim for an LTV to CAC ratio of at least 3:1, or in other words, earning at least 3 times as much from each new customer as it takes to bring them in. A ratio under 3:1 indicates that your company’s marketing efforts are producing low returns, while a ratio far in excess of 3:1 suggests that you could see more rapid growth from increasing your spend.
Lowering CACs by Outsourcing Organic Marketing
The comparison above shows that organic CACs are nearly always lower than paid. This is because most paid channels require you to pay for each new visitor they bring to your site, driving up the per-customer cost. Organic channels, by contrast, have flat costs but increasing returns as SEO and organic social media campaigns gain traction, but both require a skilled team to execute.
As a result, many companies choose to work with an outside firm to handle the organic aspects of their customer acquisition strategy. As an SEO agency, we specialize in helping companies lower their CACs using high-quality ghostwritten content, published twice weekly on your website. If you’d like to know more about our approach, you can reach out here.