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