Comparison
CAC vs LTV
CAC measures what it costs to acquire customers; LTV estimates the value those customers create over time.
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Customer Acquisition Cost (CAC)
Customer Acquisition Cost is the aggregate sales and marketing cost required to acquire one net new customer within a specific period.
CAC = Sales & Marketing Spend / Number of New Customers- Category
- Analytics & Measurement
- Used for
- Forecasting, Budget allocation, Performance diagnosis
Lifetime Value (LTV)
Lifetime Value represents the total gross profit or expected contribution from a customer relationship over time.
LTV = Average Customer Value x Average Customer Lifespan- Category
- Analytics & Measurement
- Used for
- Forecasting, Budget allocation, Performance diagnosis