metricaas

Acquisition and unit economics

The cost of winning customers and the value they generate over the relationship.

3 terms

Illustration of customer acquisition cost: a funnel attracting customers with an associated cost tag.

CAC

CAC (Customer Acquisition Cost) is how much, on average, you spend to win a new customer. Add up everything invested in marketing and sales over a period and divide by the number of new customers who came in during that period. It is the metric that tells you whether your growth is economically healthy.

Illustration of lifetime value: a customer generating recurring value along a timeline until the end of the relationship.

LTV / CLV

LTV (Lifetime Value), also called CLV or CLTV, is the total value a customer generates while they stay in your base. In a simple form, it is the recurring average revenue times margin times the customer lifetime. It is the metric that shows how much it is worth investing to win and keep each customer.

Illustration of CAC payback: a customer monthly margin stacking up until it covers the acquisition cost.

CAC payback

CAC payback is the time, in months, a customer takes to return the CAC in recurring margin. Divide the CAC by the monthly gross margin each customer generates (recurring revenue per customer times gross margin). It is the metric that shows how fast the acquisition investment comes back to cash.