The CLTV : CAC ratio indicates the effectiveness of acquiring customers relative to their long-term value. A ratio of 3:1 or higher is generally favorable, showing efficient customer acquisition. Ratios above 5:1 suggest potential for accelerated growth and efficient marketing investment.For example, consider a B2B software company offering project management solutions.Suppose they calculate the CLTV for their customers over a three-year period to be $15,000.Now, let’s say their total marketing and sales expenses incurred to acquire new customers during the same period amount to $5,000.In this case, the CLTV : CAC ratio would be 3:1 ($15,000 CLTV / $5,000 CAC).This indicates that for every dollar spent on customer acquisition, the company generates $3 in lifetime value from those customers.