📌 SaaS LTV/CAC Ratio Cheat Sheet [Download Infographic]
Download this infographic if you want to use LTV/CAC ratio for making better marketing decisions for your SaaS business.
Best practices:
Target a 3x ratio: Aim for an LTV that is at least three times the CAC for healthy growth.
Regular check-ins: Monitor the LTV/CAC quarterly/annually to stay on track and not to make any rash decisions.
Adapt to customer segments: Understand the ratio varies across customer segments—prioritize high-value customers.
Common mistakes:
Confusing CAC with CPA: CAC includes all sales and marketing costs, not just the price of acquisition.
Timing: Implementing this too early, especially in early-stage SaaS, can be misleading—long-term strategy is key.
Overlooking other factors: Focusing solely on LTV/CAC can miss other business health indicators like cash flow or customer satisfaction.
How to improve your LTV/CAC ratio:
Shorten sales & onboarding cycles: Decrease sales/onboarding time to boost the ratio.
Upsell: Increase LTV with upsells and customer success efforts.
Optimize marketing/sales spend: Lower CAC by refining marketing and sales strategies.
Revisit pricing: Update your pricing model for a better LTV/CAC balance.
Enhance product/UX: Improve retention and LTV by improving the product and user experience.
Segment: Segment customers to improve the LTV/CAC ratio.
Ideal benchmarks:
1x: Losing money—act quickly to adjust.
3x: Healthy and sustainable.
>5x: Exceptional—consider further investment in growth.
When not to rely on LTV/CAC:
Very early-stage startups, businesses with long sales cycles, or rapidly changing markets may find this metric misleading.