What is nCAC (new-customer CAC)?
How is nCAC calculated?
Take what you spent to win customers in a period. Divide it by the number of customers who bought from you for the first time in that period. Repeat buyers do not count.
The gap is the point. A blended figure of EUR 100 looks healthy. The cost of winning someone new is EUR 250.
Two choices change the answer, so write them down.
- What goes into the cost. Media only, or media plus fees and creative? Our convention is to list it every time.
- What "new" means. New to your brand, as your shop's own records show. Not "new to the platform". A trade publication points out that new to a platform is not the same as new to a brand1.
nCAC or blended CAC?
Agencies define blended CAC in more than one way. Exactius, a growth agency, divides total marketing spend by total customers acquired2. Crealytics, a digital marketing agency, describes it as total acquisition spend divided by all new customers3. Exactius defines new-customer CAC as prospecting and acquisition media spend divided by first-time purchasers2. That is why we only use "blended CAC" with its formula shown.
Our view: blended CAC is not a measure of acquisition. It can hide retargeting and organic pickup behind returning customers. nCAC is the better measure of what winning someone new costs.
For ZFD: We pair nCAC with contribution margin: does the first order, or the first few, repay what it cost to win the customer? See payback period.
Worked example
Easily confused with
nCAC vs CAC
What it costs to win one new customer, usually acquisition spend divided by new customers. Definitions of "new" vary. Our convention: nCAC counts only first-time buyers.
nCAC vs Blended CAC
A mix of definitions. Ask for the formula.
nCAC vs MER
Total revenue divided by total marketing spend. A revenue ratio, not a cost per customer.
Buzzword alert
"Our nCAC is down."
Usually means: the number is lower on some definition of new customer and some definition of cost.
Ask: Which customers count as new, and which costs are in the number?
"Blended CAC is healthy."
Usually means: returning buyers are propping up the average.
Ask: What is the same figure for first-time customers only?
FAQ
Is nCAC the same as CAC?
No. CAC can include repeat buyers. nCAC counts only first-time customers. Always ask for the formula.
Why does nCAC come out higher than blended CAC?
When the blended figure divides by all customers, returning buyers sit in the denominator and pull the average down. Check which formula was used before you compare.
Does a low nCAC mean the ads are working?
Not by itself. It says what first-time customers cost on the numbers you have. Whether the ads caused them is a separate test.
Let’s find what’s actually working.
Next step. Check what your ROAS looks like on explicit assumptions. Use the Is your ROAS real? calculator.