What are CAC, LTV, PBP in marketing?665 2018-10-09 12:39
- CAC: Customer Acquisition Cost is the cost to convert a customer to buy a product/service.
- LTV: Lifetime Value is the estimated net profit we can make from a customer.
- PBP: Payback Period in capital budgeting refers to the period of time required to recoup the funds expended in an investment, or to reach the break-even point. An ideal PBP is about 1 year.
LTV:CAC Ratio helps you determine how much you should be spending to acquire a customer, so that you can achieve sustainable growth.
1:1= lose money the more you sell
3:1or better = good.
5:1or higher = under-investing in marketing