LTV/CAC is a unit-economic measure that disciplines GTM investment. A ratio of 3:1 is conventional shorthand for a healthy SaaS business, though the right benchmark depends on segment, growth stage, and capital structure. The ratio is sensitive to definitional choices—how LTV accounts for churn and discount rate, how CAC allocates marketing and sales costs—which is why RevOps typically owns the definition, calculation, and reporting cadence. Early evidence suggests RevOps adoption improves LTV/CAC by tightening coordination across acquisition and retention.
Definition
LTV/CAC Ratio
The LTV/CAC ratio compares Customer Lifetime Value (LTV) to Customer Acquisition Cost (CAC), measuring whether a company is acquiring customers at an economically sustainable cost.