What are CAC, LTV, and PBP in Marketing?

• CAC (Customer Acquisition Cost): Customer Acquisition Cost refers to the cost of getting customers to purchase a product or service.
• LTV (Customer Lifetime Value): Customer Lifetime Value is the net profit we can obtain from a customer.
• PBP (Payback Period): The payback period for capital investments refers to the time required to recover the investment cost or reach the break-even point. An ideal payback period is about one year.

LTV:CAC Ratio

The LTV:CAC ratio helps you determine how much you should spend to acquire a customer for sustainable growth.

1. 1:1 = The more you sell, the more you lose.
2. 3:1 or higher = Good.
3. 5:1 or higher = Insufficient marketing investment.