LTV:CAC is a ratio that compares the lifetime value of a customer to the cost of acquiring that customer. It's a great way to determine whether your company is getting a good return on its marketing investment.
LTV:CAC is calculated by dividing the lifetime value of a customer by the cost of acquiring that customer.
For example, if your company spends $500 to acquire a customer and that customer is worth $1,000 in revenue over the course of a year, your LTV:CAC would be 2.5 ($1,000 / $500).
If you're getting a good return on your marketing investment, your LTV:CAC should be greater than 1. If it's less than 1, you're losing money on each customer you acquire.