LTV:CAC Ratio
Agency glossary · Updated July 2026
Definition
The LTV:CAC ratio compares a client’s lifetime value to the cost of acquiring them. It tells you how many times over each dollar spent winning a client comes back, and whether the agency can push acquisition harder without eroding margin.
Client lifetime value / customer acquisition costWhy it matters
A healthy ratio means growth spend compounds instead of leaking. Below about 3:1, acquisition is too expensive; well above 5:1 usually means you are underinvesting in growth.
Benchmark
A healthy LTV:CAC is generally cited at 3:1 to 5:1, with acquisition cost paid back in under 12 months. Treat it as a services convention rather than an exact agency law.
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