The LTV:CAC Pitfall: My 7:1 Ratio Mistake

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How I Got Trapped by LTV:CAC

Treated LTV:CAC like a scoreboard

• Higher number = winning
• Low CAC = efficiency
• Everyone applauds
• Reality: High ratios can signal under-investment in growth
• Competitors racing ahead while we stayed cautious

The 7:1 Ratio Shock

• Investor said: “Your competitor is scaling 4x faster… at 3:1”
• Felt proud → puzzled → panicked
• The ratio I thought was safe was actually a red flag in the LTV:CAC trap

Lessons from My 7:1 Ratio Mistake

• Early-stage SaaS (pre-Product Market Fit): 2:1 is okay for testing
• Scaling stage: 3–4:1 balances growth and sanity
• 6:1+ likely means holding back; growth potential untapped

Context Matters

• Not a “trophy score”
• Consider: stage, market speed, competitors

Real-World SaaS Example

• Founder friend swapped 70% of ads for a referral engine
• CAC dropped 4x
• MRR jumped from $12k to $48k in 90 days

Key Takeaway

• Blended CAC matters more than single channel metrics
• Experiment with channels to maximize growth efficiently

Balancing Growth and Efficiency

• Standing on the edge:
• Play safe → stay “efficient”
• Or invest aggressively → risk higher CAC for faster growth

Strategy Tip

• Track blended CAC rather than obsessing over individual channels
• Adjust growth spend based on stage and market context

Question for Fellow Founders

👉 Are you treating LTV:CAC like a scoreboard (vanity metric) or a steering wheel (guiding growth bets)?

What’s one SaaS metric that misled you before you learned better?

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