What is a potential action if your LTV to CAC ratio is below 2?

• A. Increase budget spend to chase more customers
• B. Ignore the metric
• C. Cut budget spend to reduce CAC and increase the ratio
• D. Focus only on AOV

Answer: (C)

Marketing efficiency is being tested here, specifically how to improve the LTV to CAC ratio. When that ratio is below two, the money you spend to acquire customers isn’t being justified by the revenue those customers generate over their lifetime. A practical action is to cut budget spend to reduce CAC, for example by pausing or pausing underperforming campaigns, tightening targeting, or reallocating toward higher-ROI channels. Lower CAC helps lift the ratio toward healthier levels, assuming LTV doesn’t drop dramatically. Increasing spend can often raise CAC and worsen the ratio, while ignoring the metric or focusing only on average order value doesn’t directly address the cost side. So cutting budget spend to reduce CAC and improve the ratio is a sensible step.