The terms CPO, CPA and CAC can be very confusing as the terms are often interchanged even though they have very different meanings.
So let's set things straight!
CPO (Cost per Order): this is the cost that it took to acquire an order.
CPA (Cost per Acquisition): this is the cost that it took to acquire a new customer / the first order.
CAC (Customer Acquisition Cost): this is the same as CPA -> the cost to acquire a new customer.
Why are these definitions important?
Your marketing platforms (Facebook, Google Ads, Pinterest, etc.) do not know if the orders they have tracked are the first, second or some other order for that customer. So when your marketing platform reports on a number they are really reporting your CPO and not your CPA which is often how they will describe the metric
That this report from Google Ads:
We ran a campaign that generated 5 orders and we spent $237 on that campaign. By looking at our UTM campaign we found this generated 3 new customers and 2 existing customers made an order.
- CPO = $237 / 5 = $47.4
- CPA = $237 / 3 = $79
- CAC = $237 / 3 = $79