Day 16: The “LTV > CAC” Growth Rule

Framework: Lifetime Value vs. Customer Acquisition Cost

📌 “If you can acquire customers for less than they’re worth, you’ll never run out of money.” – Every smart investor

Mini Course: Buy Customers Profitably, Scale Forever

Every business must master the core equation of scale:

LTV (Customer Lifetime Value) > CAC (Cost to Acquire Customer)

• LTV: How much a customer spends with you over time

• CAC: How much it costs to acquire them (ads, sales, outreach, etc.)

The bigger the gap, the faster and more profitably you can grow.

Task: Calculate Your LTV and CAC

1. LTV:

   • Avg Order Value × Purchase Frequency × Retention Duration

2. CAC:

   • Total marketing + sales spend ÷ new customers acquired

Is your LTV at least 3x your CAC? If not, increase retention/monetisation or lower acquisition cost.

Insight:
Know your unit economics cold. This ratio is your growth engine—or your silent killer.