What is the CAC to LTV ratio?

The CAC to LTV ratio, more accurately expressed as LTV:CAC, is a critical metric that compares the lifetime value a customer brings to your business against the cost incurred to acquire that customer. A higher ratio indicates a more profitable business model, as each customer generates significantly more revenue over their lifetime than they cost to acquire. For instance, a 3:1 ratio is often considered healthy, meaning a customer brings in three times what it cost to acquire them. The option "The ratio of customer acquisition costs to revenue" is incorrect because it doesn't account for the full value of a customer over time. "The ratio of revenue to profits" is a different profitability metric, and "The ratio of customer lifetime value to revenue" doesn't directly measure acquisition efficiency.