The Customer Aquistion Cost – Lifetime Value ration (CAC-to-LTV) compares the cost of acquiring customers to the value they bring in. This ratio helps determine if customers are profitable.
- Formula: CAC-to-LTV Ratio = Customer Lifetime Value (LTV) / Customer Acquisition Cost (CAC)
- Application: Helps evaluate the financial efficiency of customer acquisition efforts, signaling whether the company is overspending or under-investing in customer acquisition.
Learn more about CAC-LTV Ration: