Analytics
Customer Acquisition Cost Ratio
The customer acquisition cost ratio compares the cost of acquiring a customer to the revenue that customer generates, typically expressed as CAC:LTV. A healthy ratio indicates sustainable growth where lifetime value significantly exceeds acquisition cost.
Examples
A SaaS company with a CAC of $200 and an average LTV of $1,200 has a CAC ratio of 1:6, well above the 1:3 minimum benchmark.
Best Practices
Track CAC ratio by channel and cohort, aim for at least a 1:3 ratio for sustainable growth, and watch for deterioration that signals rising acquisition costs or falling retention.