The payback is 14 months. The contract runs for 12.

A healthy LTV to CAC ratio can sit comfortably on top of an acquisition engine that quietly consumes cash faster than it returns it.

By Steve 5 min read
Abstract bridge artwork for The payback is 14 months. The contract runs for 12.

A business acquires customers at £8,400 apiece and sells them a £1,000-a-month service. Divide one by the other and payback looks like 8.4 months: respectable. Multiply the monthly fee by an average life of three years and the lifetime value to acquisition cost ratio comes out above 4:1, which is the number most boards ask for. And yet the overdraft keeps getting deeper as the customer base grows. The ratio is not wrong. It is answering a different question from the one the bank balance is asking. LTV to CAC…

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