Shopify Ops Glossary
LTV:CAC Ratio
The ratio of customer lifetime value to customer acquisition cost.
Definition
The LTV:CAC ratio measures the relationship between how much value a customer generates and how much it costs to acquire them. It is the fundamental measure of ecommerce unit economics.
Why It Matters for Shopify Brands
An LTV:CAC ratio below 1:1 means you lose money on every customer. 1:1 means you break even. 3:1 is considered healthy. 4:1+ is excellent and indicates significant scaling potential.
Benchmarks
Target: 3:1 or higher. Most Shopify brands at early stages see ratios below this and need to improve CLV through repeat purchase and ops improvement.
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