Lifetime value versus cost decides if you have a business

ROAS (return on ad spend) only looks at ads. Useful, incomplete, and easy to make look good by counting results over a long period, by people already searching for the brand name, and by giving credit for ads people only saw. CAC (customer acquisition cost) is closer to the truth because it asks what it costs to win a customer, not a click or a form fill. LTV:CAC (lifetime value versus that cost) is closer still because it asks whether that customer was worth winning.

A 4:1 ROAS on a product with thin profit that customers leave quickly is a slow drain. A 2.5:1 LTV:CAC on a clinic or a company that sells to other companies, where you earn the money back in six months, can be a strong business.

What must be true

You cannot work out LTV if you cannot see who stays. You cannot work out CAC if CRM (the customer records system), ads, and the till do not talk to each other. You cannot run a ratio you only look at in the last quarter.

The practical work is unglamorous: where each record came from, revenue on the record, a clear meaning of when a customer has left, a view of customers grouped by when they joined, and a weekly meeting that starts with the ratio rather than the spend.

What QUBE refuses

We will not pretend a purchase reported by an ads platform is a customer. We will not hide overall CAC behind an ads source that is only catching people who already searched for the brand. We will not treat a clinic or a luxury brand as if it were a discount online shop.