Companies often miscalculate CAC and then make decisions with skewed data. Often the type of decisions, you can't afford to get wrong.
And although calculating your LTV to CAC ratio isn’t difficult, the process of knowing it and taking steps to improve it is the real test. Here, we’ll run you through how to calculate your ratio, answer the question: 'What is a good LTV to CAC ratio?’ and address methods for im...
Companies often miscalculate CAC and then make decisions with skewed data. Often the type of decisions, you can't afford to get wrong.
While CAC is all about the early days of hooking customers, CLV is your big picture – it's about keeping those customers around and how valuable they are over time. Getting the balance right between these two is super important for a business that wants to keep growing. When your CLV is...
This also puts into perspective the customer acquisition cost (CAC), which is the initial cost of acquiring one new customer. The customer acquisition cost for each segment should be lower than the lifetime value of a new customer, meaning that you’re getting more out of each customer than...
The Influence of CAC As you can see from the graphic below, CAC directly influences both CAC payback and LTV (net LTV, that is). If you can reduce your average CAC, you don’t start off with as much negative profit. So with everything else being equal (MRR, churn rate, etc), you...
Discounts are the laziest path to a customer conversion and have serious ramifications for your SaaS unit economics over the long term.
Here, we’ll run you through how to calculate your ratio, answer the question: 'What is a good LTV to CAC ratio?’ and address methods for improving yours. What is customer lifetime value (LTV)? Customer LTV (aka CLV or CLTV) is a metric that represents the total amount of revenue...
•What is a good LTV to CAC ratio? •How to improve your LTV to CAC ratio •Scale your business across borders with Airwallex Customer lifetime value (LTV) and customer acquisition cost (CAC) are metrics every business should pay attention to. But the LTV CAC ratio is important, to...
Desired Scenario: Lower CAC is preferable, indicating efficient use of resources in acquiring customers. Customer Lifetime Value (CLV) Definition: The total revenue a business expects from a customer throughout their lifecycle. Focus: Represents the long-term value of customer relationships. Calculation...