How to optimize paid channels for LTV/CAC ratio: Hiearchy of SaaS metrics

LTV/CAC Financial Model
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LTV
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How much do customers pay on average across their total life time
$0.00
CAC
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How much does it cost on average to acquire each new customer
$0.00
LTV/CAC Ratio
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For healthy growth, the ratio between customer lifetime value (LTV) and customer acquisition costs (CAC) should be at least 3.
0.00
Costs
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Total costs for acquiring new customers in a given timeframe.
$0.00
Customers
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Total amount of customers acquired in a given timeframe.
0
CPC
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Cost per click: On average how much you pay for each click, Also cost per visit (CPV)
$0.00
Visits
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How often people land on a website (Same user can count more than once)
0
Total CVR
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How many visits actually turn into customers in percent.
0%
ARPU
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What a customer pays per month on average. Also: Average contract value (ACV)
Churn
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How many customers cancel each month in percent. 1-Churn = Retention
CPM
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Cost per 1000 impressions. Depends on competitiveness of audience and channel
CTR
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Click through rate: How often do people click on an ad or link in percent.
Impressions
?
Total amount of how often an ad or link has been shown.
Visit→Trial CVR
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How many visits result in a demo, free trial, or freemium account in percent.
Trial→Paid CVR
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How many trials actually become a paying customer in percent.
💡 To increase ARPU, focus on high-value segments and redesign your pricing model.
💡 To decrease Churn, offer discounts for annual contracts and improve your product.
💡 To decrease CPM, find less competitive channels or negotiate better ad deals.
💡 To increase CTR, design better ads and messaging, and improve your ad targeting.
💡 Impressions should be kept constant or increased, as long as other metrics remain stable.
💡 To increase Visit-to-Trial CVR, split-test landing pages and improve your signup flow.
💡 To increase Trial-to-Paid CVR, improve your onboarding flow and increase sales & support efforts.