LTV:CAC Ratio
The relationship between what users are worth and what they cost to acquire - the fundamental sustainability metric
Your sustainability metric for determining whether paid acquisition can profitably scale.
Interpreting Results
Below 1:1 — Unsustainable unit economics. Stop scaling.
1:1 to 2:1 — Marginal. Optimize before scaling.
2:1 to 3:1 — Healthy. Scale cautiously.
Above 3:1 — Excellent. Scale aggressively.
Critical Note: Always validate with incrementality testing to ensure you're measuring true incremental CAC, not inflated attributed CAC. Without incrementality, your ratio looks better than reality.
Optimization Levers
Increase LTV: Improve retention, increase revenue per user, add cross-sell features, reduce churn
Decrease CAC: Better behavioral onchain targeting, improved creative ab testing, more efficient channels, higher conversion rates
Focus on whichever lever has more headroom for improvement. Sometimes doubling retention is easier than halving CAC.