Why is a high CAC bad?
A very high CAC means you are spending a LOT of acquiring new customers. This is a futile exercise. While customer acquisition is necessary for new businesses, you also must learn to retain customers. This is because loyal customers have a high LifeTime Value (LTV). Also, if you’re spending a lot on CAC, this means you’re making less profit. At times, startups make the mistake of spending so much on customer acquisition that they don’t make any profits at all. Keeping your CAC in check is crucial to prevent your new business from sinking.