Achieve the ideal LTV to CAC ratio

New Ideas in MarketingEssential news for marketers, summarised by YouGov
April 29, 2021, 3:19 AM UTC

Adding the total revenue for a specific period and dividing it by the marketing spends helps calculate return on marketing investments.

B2B marketers must link marketing efforts directly to revenue to demonstrate the effectiveness of their campaigns. Add the total number of new prospects who interacted with a campaign and divide it by the number of conversions to calculate the impact of marketing investments.

Marketers can also showcase the percentage of consumers generated from marketing leads, by calculating the number of conversions from activities like sign-ups in a specific period. To calculate consumers’ lifetime value (LTV), marketers must estimate the amount used to acquire new customers and retain the existing ones.

Totalling the cost of sales and marketing and dividing it by the number of new consumers helps calculate customer cost acquisition cost (CAC). The ideal LTV and CAC ratio should be 4:1 and 3:1.

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