What is CAC?
Customer Acquisition Cost (CAC) is the total cost of the sales and marketing effort needed to win one new customer. It is one of the clearest signals of whether your business model actually works.
Formula: Total marketing spend ÷ new customers acquired = CAC.
What is a good LTV:CAC ratio?
The LTV:CAC ratio compares what a customer is worth to what they cost to acquire. The figures below are common rules of thumb, not guarantees, your real numbers depend on margins and overheads:
- Around 1:1 usually means you are losing money once other costs are counted in.
- About 3:1 is the level most people treat as healthy: you make roughly three times what you spend to acquire a customer.
- 5:1 or higher can be a sign you are under-investing and could afford to grow faster.
How do you lower your CAC?
The fastest lever is rarely cheaper ads, it is a better conversion rate. If you turn more of the same traffic into customers, your cost per customer falls without spending an extra dollar. Double your conversion rate and you effectively halve your CAC on the same ad budget.
That is exactly what Zyro is built to do: A/B test your pages to find what sells, show the right on-site offer at the right moment, and trace every sale back to the ad that earned it, so you spend where the buyers actually are.