The LTV:CAC ratio compares customer lifetime value to acquisition cost. Learn the 3:1 benchmark and where it sits in a KPI tree.
The LTV:CAC ratio divides Customer Lifetime Value by Customer Acquisition Cost. It is the single most-cited unit-economics indicator for subscription businesses. A ratio below 1:1 means acquisition destroys value; 3:1 is the widely used healthy benchmark; above 5:1 often signals under-investment in growth. In a KPI tree, LTV:CAC is a derived ratio node that links the retention branch (LTV) to the acquisition branch (CAC).