CAC=TotalMarketingSpend/NumberofNewCustomersAcquired What counts as "total costs"?
What to include in total costs typically covers:
Advertising spendMarketing team salariesSales team salaries and commissionsSoftware and tools used for acquisitionAgency feesContent production costs
LTV:CAC ratio
The LTV:CAC ratio tells you whether your acquisition is sustainable:
3:1 or higher → generally considered healthy. You are earning significantly more than you spend to acquire customers.1:1 → you are breaking even, which is unsustainable long-term.Below 1:1 → you are losing money on every customer.A few nuances worth knowing:
Blended CAC includes all customers. It treats paid, organic, outbound, events, partnerships, referrals, and every other channel as one pool.Paid CAC isolates only paid acquisition costs.CAC payback period measures how long it takes to recover your acquisition cost from a customer's revenue.
Daily watch scenarios
▶Scenario: Abnormality
It is Tuesday. You check the dashboard. Facebook CAC spiked to $400 (usually $200).
Action: Pause the "Creative Testing" campaign immediately.▶Scenario: Opportunity – "The Cheaper Click"
The Cost Per Click (CPC) on LinkedIn is dropping on weekends.
Insight: Competitors turn off their ads on weekends, so the auction is cheaper.Recommendation: Shift 30% of budget to Saturday/Sunday to get cheaper users.▶Scenario: Risk – "The Creeping Cost"
Facebook CAC has slowly increased from $50 to $55 to $60 to $65 over 4 weeks.
Insight: Ad fatigue. People are bored of the current creative.Action: Launch new creative visuals now before CAC hits $80.▶Scenario: Risk Alert – Spend Efficiency
Google Search CPC increased by 40% yesterday.
Why: A new competitor ("Competitor X") has started bidding aggressively on your brand name.Trend: Sudden spike starting 24 hours ago.Action: Decide whether to enter a bidding war (spend more) or let them have the traffic.