Transparent Growth Measurement (NPS)

Ratio of Customer Lifetime Value to CAC

The Ratio of Customer Lifetime Value to CAC is a way for companies to estimate the total value that your company derives fromeach customer compared with what you spend to acquire that new customer.

Why is it important to know LTV:CAC?
  • Throws light on the ROI generated by your sales and marketing team.
  • Indicates the total value your company gets from each customer against the amount you have spent to acquire that new customer.
  • Helps you strike the mean path by keeping this ratio within a normal range, neither too high nor too low.
Do not have CLTV Details? CLTV Calculator
Do not have CAC Details? CAC Calculator

Hmmm… looks like we can help you refine those numbers for better results and profitability!

Get Started!

7 Important Metrics Every Startup Founder Should Care About

Do you all know that it’s more costly to acquire new prospects than to retain existing ones! That’s why extending your CLV is essential to a healthy business model & overall business strategy… Don’t believe us? Here is an Ebook on 7 vital metrics every startup founder should know – you need to read if you want to increase profitability, retention and overall ecommerce success.


Why these 7 metrics are significant for your business and should be measured at regular intervals?

Other Calculator

Explore More

Similar Blog's

How to calculate Marketing percentage Customer Acquisition Cost (CAC)
Customer Acquisition Costs (CAC) – what you pay on average to acquire new customers – is obviously pretty darn important.
Customer acquisition cost is the cost associated with convincing a consumer to buy your product or service, including research, marketing
Customer acquisition cost is the cost associated with convincing a consumer to buy your product or service, including research, marketing.
CAC Payback Period: How to calculate it & why it is important
Learn how to calculate CAC payback period and also understand why it is a crucial metric. Here is all you have to know on CAC. Read on!
How to Calculate Customer Acquisition Cost with Formula
How to Calculate Customer Acquisition Cost with Formula
Customer acquisition cost (CAC) is a metric used to describe how much money companies spend acquiring new clients. In addition to calculating the resources.
Digital Marketing to hack their customer Support
This blog will guide in how founder fo digital marketing to hack their customer support. It can help you get a consistent flow of traffic as well.
Understanding The Average Customer Acquisition Cost by Industry
Online businesses are aware that there are several e-commerce indicators that they must be aware of to expand their businesses. However, one statistic and expenditure stand out above all others. That is the average customer acquisition cost!


The ultimate digital marketing checklist with hacks, tips and more! Download it for FREE! Find the right strategy for your business with our checklist!

Marketing Strategy Quizzes

Marketing strategy quizzes assess and improve your grasp of crucial marketing concepts, such as target audience, segmentation, branding, pricing, and promotions. These quick assessments help individuals and professionals stay updated on marketing trends and identify areas for improvement.

Marketing Strategy Quiz : Are you Creating Successful Marketing Strategies?

A marketing strategy is a plan for reaching and engaging target customers and driving sales. We have built this quiz for marketers who want to challenge their marketing skills and expertise. With instant results and valuable insights, this is an opportunity you won’t want to miss!

Test Now
Marketing Mindset: Test Marketing Strategy Competency with This Quiz

Marketing strategy is a vital part of any business’s success, as it outlines the plan for how the company will reach and engage its target audience to achieve its goals. A marketing strategy quiz is an effective way for assessing your knowledge and understanding of this important area of business. Get started now.

Test Now


Answers to Frequently Asked Questions about Marketing % Of Customer Acquisition Cost

Run productive experiments in Google Ads

LTV is a (Revenue the customer pays in a period – gross margin) ÷ Estimated churn percentage for that customer

Test your knowledge of Google Ads extension

The higher the LTV:CAC, the more ROI your sales and marketing team is delivering to your bottom line. However, you don’t want this ratio to be too high, as you should always be investing in reaching new customers. Spending more on sales and marketing will reduce your LTV:CAC ratio, but could help speed up your total company growth.

What is the LTV formula?

LTV = ARPU (average monthly recurring revenue per user) × Customer Lifetime. Using churn, you can also determine lifetime value. (Which is a number you likely have more readily available). User churn / ARPU equals LTV. Your lifetime value will decrease the higher your user churn rate.

What is the difference between LTV and LTC?

It contrasts the loan amount (“loan”) with the estimated post-construction value (“value”) of the structure. Similar to the LTC ratio, we use the actual loan amount for the “loan” portion of the LTV ratio. However, the value is arbitrary; therefore, a property assessor evaluates it.

What % of LTV is good?

< 80% A healthy loan-to-value ratio, as a general guideline, shouldn’t be higher than 80%. A high LTV is anything above 80%, meaning borrowers may pay higher borrowing fees, need private mortgage insurance, or even be turned down for a loan. LTVs, more significant than 95%, are frequently viewed as unsatisfactory.

Contact Us