What Is a Good LTV to CAC Ratio? How to Calculate It
This lesson is an article published by Shopify.
Read the articleWhat you'll get
Shopify's blog shows how to work out what a customer is worth over time, what it costs to win one and the ratio between the two, with simple worked examples and ways to improve a weak ratio. Shopify sells the store software it mentions, its customer value counts revenue rather than profit, and its benchmarks come from online stores, so redo the math with gross profit per order from your own margin sheet.
Do this week
Using a year of your online orders, work out your cost to win a customer and the gross profit that customer brings in over repeat orders, and write the ratio.