LTV/CAC

LTV/CAC is a foundational revenue efficiency metric capturing the ratio of total expected profit from a customer (Lifetime Value) to the full cost required to acquire that customer (Customer Acquisition Cost). A best-practice LTV/CAC ratio is >3, signaling capital efficiency, scalable growth, and healthy revenue architecture; ratios below 1 signal a non-viable business. In Traction Gap Partners’s context, this is tracked and optimized across segments, funnel stages, and go-to-market experiments.