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Customer Lifetime Value (LTV) & LTV:CAC
Estimate customer lifetime value from order value, purchase frequency, lifespan and margin, and compare it to customer acquisition cost.
Tip from Tink: An LTV:CAC of 3:1 or better is a common healthy target.
Lifetime value (profit)
$300.00
Lifetime revenue
$600.00
LTV : CAC
3 : 1
Months to earn back CAC
12
Healthy: 3:1 or better is the usual target.
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How to use the Customer Lifetime Value (LTV) & LTV:CAC
- Enter average order value and orders per year.
- Add how many years customers stay and your margin.
- Enter acquisition cost to see LTV:CAC and payback time.
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