If you’re pouring money into digital marketing and not sure what you’re getting back, you’re not alone.
Most brands know they should be tracking ROI—but too many rely on surface-level metrics like clicks, impressions, or even short-term sales. What really matters for long-term scalability is profitability per customer—and there’s one ratio that reveals it all:
The Golden Formula: LTV / CAC
This is the formula we live by at Arant Ventures:
Marketing ROI = LTV / CAC
Where:
- LTV (Customer Lifetime Value) = the total revenue you expect from a customer over the duration of their relationship with you
- CAC (Customer Acquisition Cost) = how much you spend in marketing/sales to acquire that customer
The higher the ratio, the better. Ideally, you want LTV to be 3x or more than CAC. That means for every $1 you spend acquiring a customer, you’re earning $3 or more in return.
Why It Matters
Without knowing your LTV and CAC, your marketing is like driving blind. Here’s what happens when you use the LTV/CAC ratio as your compass:
- 🎯 You know exactly which channels are worth scaling
- 💵 You can confidently invest in campaigns that will pay back
- ⚙️ You can build systems that generate predictable and sustainable growth
How Arant Ventures Helps Define and Scale It
At Arant Ventures, we partner with growth-stage brands to do three key things:
1. Calculate True LTV
Most brands undercalculate LTV. We go deep:
- Customer cohorts
- Purchase frequency
- Upsell and retention potential
- Churn rates
🔗 Recommended resource: HubSpot’s guide to calculating LTV
2. Map CAC by Channel
Your average CAC isn’t enough. We break down CAC by source (Google, Meta, email, referrals, etc.) so you know where you’re overspending—and where you’re thriving.
🔗 Learn more: Google’s Skillshop: Measurement & Attribution Training
3. Align Strategy with Scale
Once we have the data, we build a playbook:
- Where to scale ad spend
- Where to reallocate budget
- How to nurture high-LTV customers
- How to build repeatable acquisition models
Real-Life Example
Let’s say you’re a DTC brand selling a $75 subscription box.
- Customers stay for 8 months on average → LTV = $600
- You spend $150 to acquire a customer → CAC = $150
- Your LTV/CAC = 4
You’re profitable—and scalable. Let’s go.
Now imagine you start scaling Meta Ads, and CAC rises to $300. Suddenly your LTV/CAC drops to 2. You’re still profitable… but scaling could now hurt your margins unless LTV goes up or CAC goes down.
This is how smart brands scale—and how we guide that growth.
Want to Learn This Yourself?
Here are a few great places to start:
- Google Analytics Certification (free)
- Meta Ads Certification
- Reforge’s Growth Series (paid, advanced)
- CXL’s Marketing ROI & Analytics Training (paid, in-depth)
Let’s Scale Smarter
At Arant Ventures, we don’t believe in bloated ad spend or guessing games. We believe in performance-backed growth, powered by data and strategy.
Ready to define your LTV/CAC and unlock real ROI?
📩 Let’s talk: nathan@arantventures.com
📊 See if your marketing is ready to scale: Free Audit Request
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