Learn how to measure whether your marketing is actually profitable by comparing customer lifetime value (LTV) to customer acquisition cost (CAC). In this lesson, you’ll break results down by month and by marketing channel so you can see what’s working, what’s too expensive, and where to focus for better profit.
Download the Excel file used in this tutorial:
Q1. What is the LTV to CAC ratio?
The LTV to CAC ratio compares how much profit you expect to earn from a customer over time (LTV) versus what it costs to acquire that customer (CAC). It’s one of the most important metrics for understanding whether growth is profitable.
Q2. Why is LTV to CAC more important than “getting more leads”?
More leads doesn’t always mean more profit. If it costs more to acquire customers than you earn from them, growth can actually hurt the business. LTV to CAC helps you make confident decisions about marketing spend and pricing.
Q3. What will this video help me do inside Excel?
You’ll learn how to organize your data so you can compare performance month by month and also evaluate results across different marketing channels, then visualize the findings with simple charts.
Q4. How does breaking this down by marketing channel help?
It shows which channels bring in customers who are truly profitable. You can quickly spot channels that look busy but don’t produce enough profit, and double down on the ones that generate the strongest return.
Q5. What data do I need to follow along with this analysis?
You’ll typically need your customer acquisition cost, the profit you make from the first job, estimated follow-up revenue (like repeat jobs or agreements), and the marketing channel tied to each customer.
Q6. How can I use this metric to make better decisions?
Once you see LTV to CAC by month and channel, you can adjust your marketing budget, improve pricing, prioritize higher-performing channels, and avoid spending on acquisition methods that don’t pay back.