LTV:CAC for E-commerce: Definition, Benchmark, Tips to Improve

By Harry ChuNovember 7, 20248 min read
LTV:CAC for E-commerce: Definition, Benchmark, Tips to Improve

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  • 3:1 Ratio = Ideal Balance for profitability and growth
  • Below 3:1 = Optimize Efficiency by increasing LTV or reducing CAC
  • Above 5:1 = Opportunity to Scale by investing more in marketing
  • This includes all expenses related to acquiring customers, such as ad campaigns, influencer promotions, and content marketing.
  • This measures the total revenue a customer brings over their relationship with your business.
  • Allocating budget to high-performing channels
  • Building brand value with organic marketing
  • Segmenting customers to target high-LTV groups
  • Running strategic upsell and cross-sell campaigns

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Harry Chu

Founder of TrueProfit & eCommerce Profitability Expert

Harry Chu is the Founder of TrueProfit, a net profit tracking solution designed to help Shopify merchants gain real-time insights into their actual profits. With 11+ years of experience in eCommerce and technology, his expertise in profit analytics, cost tracking, and data-driven decision-making has made him a trusted voice for thousands of Shopify merchants.

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