Why the  LTV to CAC Ratio is Important

Hi! We’re Blackship.One and we specialize in the hyper-acceleration of high-tech brands.

We’ve put together a suite of online calculators to help you make better marketing decisions.

We’ve designed the calculator on this page to help you determine your LTV to CAC ratio. Essentially, this ratio shows you how good (or bad) of a job you’re doing at acquiring new customers while optimizing your ROI. 

LTV is the average lifetime value of a customer for your company.

And

CAC (Customer Acquisition Cost) is the cost you spend to acquire a new customer.

By determining your LTV to CAC ratio, you’re essentially determining how efficient your new customer acquisition channels are. A LTV to CAC ratio of 1:1 means it costs you as much to acquire a new customer as they make you (i.e. you’re only breaking even). However, a LTV to CAC ratio of 4:1 means the customer is 4 times more valuable than the cost of acquiring them.

What’s an ideal LTV to CAC ratio?

You should aim for anything over 2:1. However, generally 3:1 is considered ideal and 4:1 is considered exceptional.

How do we know how long someone will remain a customer? 

There are a few different ways to do this. The calculator on this page uses the following formula:
LTV = ARPU / User Churn

Want to Work Together?

If you have a company in the high-tech industry and you’re looking for a content marketing partner to help you scale, then reach out to us today and schedule a free consultation to see if we’d be the right content marketing agency for your brand.