Glossary · Sales efficiency
LTV:CAC ratio
Lifetime value divided by customer acquisition cost — a shorthand for whether you earn enough from a customer to justify what you spent to win them. Many teams want this well above 1×; “how much above” depends on payback, margins, and growth goals.
Related: Lifetime value (LTV) · Customer acquisition cost (CAC) · CAC payback period · Churn rate
A bit more nuance▾
- Garbage in, garbage out: weak LTV or CAC definitions make the ratio meaningless.
- High ratio with tiny volume may matter less than healthy ratio at scale.
Go deeper▾
Discussion questions▾
- Would you rather improve LTV or CAC first in your business today?
- What assumption in your LTV model would hurt most if it were wrong?
Educational reference only — not legal, tax, or investment advice. Terms vary by country and deal; ask a qualified professional when it matters.