Definition
What is LTV:CAC Ratio?
Customer lifetime value divided by the cost to acquire that customer.
The LTV:CAC ratio compares what a customer is worth over their lifetime against what it cost to acquire them. It is the core unit-economics health check for any acquisition channel. A common benchmark treats 3:1 as healthy: below it, growth spend destroys value; far above it (6:1+) may signal underinvestment in growth.
Formula
LTV:CAC = Customer Lifetime Value ÷ Customer Acquisition CostExample
If a customer is worth $420 over their lifetime and costs $120 to acquire, LTV:CAC = 3.5:1 — healthy enough to keep scaling the channel while watching payback time.