The LTV / CAC ratio is a powerful analysis tool, which can be calculated in terms of customers or products. The objective is to compare the level of turnover generated compared to the acquisition cost.
Applied to a product level, this ratio makes it possible to identify the products that deserve to be more valued because the LTV / CAC ratio is high. Conversely, this also makes it possible to devalue (or even delete) the products whose LTV / CAC ratio is not good.
To calculate this ratio, it is customary to define:
- LTV (= lifetime value, or life value in French) as the total turnover on this product.
- CAC as the sum of spending in marketing campaigns whose destination page is the product page. This requires recovering the acquisition costs of ADS campaigns by destination page.
Thanks to Octolis, you have turnkey reporting with the LTV / CAC ratio calculated for each product, and each product category.
This table can be synchronized live in Google Spreadsheet to be easily shared and handled by anyone.