Lifetime Value: Customer Acquisition Cost (LTV:CAC) Metric

Measure the relationship between the lifetime value of a customer and the cost of acquiring that customer.

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Digital Marketing KPI Example - Lifetime Value: Customer Acquisition Cost (LTV:CAC) Metric

Overview

The Lifetime Value:Customer Acquisition Cost metric is by far one of the most key metrics to monitor for your business. Tracking the total value of a single customer and comparing it to the cost of acquiring them gives you insight into how effective your spending is, while also giving you the data to justify your customer acquisition spend.

Formula

Gross Margin % X ( 1 / Monthly Churn ) X Avg. Monthly Subscription Revenue per Customer : Sales and Marketing Costs / New Customers Won

Reporting frequency

Monthly

Example of KPI target

3:1

Audience

CEO, CMO, Marketing Manager, Sales Manager

Variations

CAC:LTV

Related Metrics & KPIs

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