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Mastering Profitability: CAC vs. CLTV Explained
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Discover the key to sustainable business growth by mastering Customer Acquisition Cost (CAC) and Customer Lifetime Value (CLTV). Learn how to evaluate profitability, optimize cash flow, and achieve the ideal 3:1 CLTV-to-CAC ratio for long-term success. Watch now for actionable insights!
To run a profitable business, it’s crucial to evaluate two key metrics: Customer Acquisition Cost (CAC) and Customer Lifetime Value (CLTV). CAC is the cost spent to acquire a new customer, while CLTV represents the total revenue a customer generates over time. A healthy business aims for a CLTV-to-CAC ratio of 3:1, meaning for every dollar spent on acquisition, you earn three dollars in return.
The break-even analysis shows how long it takes for a customer to repay their acquisition cost. This helps optimize customer acquisition strategies and cash flow for long-term profitability and growth.
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