LTV:CAC Ratio
Stub
This metric is defined in Core Metrics. Finance references it as a key outcome metric.
LTV:CAC Ratio: The ratio of customer lifetime value to acquisition cost. Measures the return on investment from sales and marketing spend.
Formula
LTV:CAC = LTV / CACBenchmarks
- Below 1:1: Losing money on every customer
- 1:1 to 2:1: Breaking even or marginal, concerning to investors
- 3:1 to 4:1: Industry standard, healthy sustainable growth (Median B2B SaaS: 3.2:1)
- 4:1 to 5:1: Strong business model
- Above 5:1: Under-investing in growth; could be growing faster
What It Tells You
Unit economics health. Are customers worth more than they cost to acquire?
Related Metrics
Connected in the GASP relationship graph.
Upstream: what drives this
Downstream: what this drives
- LTV:CAC Ratio measures Customer (Entity)