How LTV-to-CAC Ratio Works
Divide a consistently defined LTV by CAC. If contribution-based LTV is $900 and fully loaded CAC is $300, the ratio is 3:1.
A Simple Example
Two channels with the same first-order CPA can have different LTV-to-CAC ratios if one brings customers who repeat more often.
Why LTV-to-CAC Ratio Matters
The ratio helps evaluate whether acquisition spending creates enough long-term economic value.
Common Misreading
Do not divide revenue LTV by contribution-based CAC or mix time horizons. The ratio is only meaningful when both inputs use compatible definitions.