LTV is the total revenue you expect from a customer over their entire relationship with you. The simple formula: ARPU × Gross Margin % × Average Customer Lifetime. LTV:CAC ratio is the classic SaaS health metric — 3:1 is the benchmark, meaning $3 of lifetime value per $1 spent on acquisition. High NRR improves LTV dramatically; high churn destroys it.
For example, if customers pay $500/month, stay for an average of 24 months, and your gross margin is 75%, LTV = $500 × 24 × 0.75 = $9,000 — and if your CAC is $2,000, your LTV:CAC ratio is 4.5x, which is strong.
LTV:CAC ratio guides our channel investment decisions for clients — channels with strong payback periods get scaled, marginal ones get cut.
Related Terms
Relevant Cactus Services
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Book a free strategy call →Demand Generation
Demand gen is the full-funnel marketing strategy designed to create awareness, generate interest, and drive pipeline for your product.
Lead Generation
Lead gen is the tactical activity of capturing contact information from potential buyers — gated content, webinar registrations, demo requests, contact forms.
Account-Based Marketing (ABM)
ABM flips traditional demand gen: instead of casting wide and filtering, you identify a list of specific target accounts and run personalized marketing just at them.
Intent Data
Intent data tells you which companies are actively researching topics related to your product — reading articles, comparing vendors, downloading relevant content — even before they fill out a form on your site.
Dark Social
Dark social refers to the sharing and discovery that happens in private channels — Slack communities, DMs, WhatsApp groups, private Discord servers, word-of-mouth — that attribution tools can't track.
Customer Acquisition Cost (CAC)
CAC is the total cost to acquire a new customer, including all sales and marketing spend.