Process

From cost per lead to whether you can scale

Each number builds on the last. Scale spend only once the last step says each customer is worth more than they cost.

  1. Price the lead

    Cost per lead is spend divided by leads. Add your close rate and it becomes what each customer from that channel actually costs.

  2. Load the full cost of a customer

    CAC adds every sales and marketing cost — salaries, software, agencies — to the media spend, so the number reflects what winning a customer really takes.

  3. Compare it with what a customer is worth

    LTV:CAC divides lifetime value by acquisition cost. Around 3:1 leaves room to scale; well below it, more spend only buys more losses.

  4. Judge the whole program

    Marketing ROI sets the revenue marketing generated against everything invested in it — the number leadership asks for at budget time.

Frequently asked questions

  • What is a good LTV:CAC ratio?

    Around 3:1 is the most widely used benchmark: each customer is worth three times what it cost to win them. Below 1:1 you lose money on every customer; far above 3:1 can mean you are spending too little on growth.

    Calculate your LTV:CAC ratio →
  • What is the difference between CAC and CPA?

    CPA is usually a channel number: ad spend divided by the conversions that channel reports. CAC is a business number: every sales and marketing cost divided by the new customers won. CPA says which campaign is efficient; CAC says whether the business can afford its growth.

    Calculate your CAC →
  • Should CAC include salaries and tools?

    For a fully loaded CAC, yes — salaries, commissions, software and agency fees alongside media spend. A paid-only CAC is useful for comparing channels but understates what each new customer really costs.

    See the Lead Generation system →
  • How do I calculate cost per lead?

    Divide what a channel or campaign cost by the leads it produced: $2,000 for 80 leads is a $25 cost per lead. Divide that by your close rate to get the cost per customer — at a 10% close rate, $250.

    Calculate cost per lead →
  • How do I calculate marketing ROI?

    Subtract the marketing cost from the revenue it generated, then divide by the cost. $250,000 of revenue from $50,000 invested is a 400% return.

    Calculate marketing ROI →
  • Which channel should get the credit for a lead?

    Usually more than one. Last-click reporting gives every lead to the final touch; a multi-touch attribution model shares the credit between the channels that introduced, nurtured and converted the buyer — which changes what CAC looks like by channel.

    See attribution modeling services →
Work With Us

Make the economics work, then scale them.

Book a call and we’ll walk through your CAC, lifetime value and cost per lead — and whether the next dollar of spend will pay for itself.