LTV:CAC measures the ratio of customer lifetime value to acquisition cost. A healthy SaaS business needs LTV to significantly exceed CAC - 3x or above is considered healthy.
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Pro Tip
Reducing churn from 5% to 3% doubles LTV. Fixing retention is often more valuable than reducing CAC.
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Did You Know?
Salesforce and HubSpot both maintain LTV:CAC ratios above 5x - a key reason investors value them at premium multiples.
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