The Most Important Business Metric

Customer Lifetime Value is the North Star for marketing and growth teams. If you know a customer is worth $480 in profit over their lifetime (the default scenario: $100 order × 4 orders/year × 3 years × 40% margin), you can confidently spend up to that amount — and ideally far less — to acquire them. Without this number, advertising budgets are a guess.

The LTV/CAC Ratio

In e-commerce and SaaS, an LTV/CAC ratio of 3:1 is considered healthy. It means every $1 spent on marketing returns $3 in lifetime profit. Raising retention is the highest-leverage move: with an 80% annual retention rate, the churn-adjusted LTV of $800 is 1.7× the simple profit LTV. At 90% retention it would double to $1,600.