The two numbers
CAC (customer acquisition cost) is everything you spent to win new patients in a period, including ad spend, agency and software fees and sales incentives, divided by the number of new patients who enrolled in that period.
LTV (lifetime value) is the gross profit a patient generates across their whole relationship with you: evaluation, program, membership and retail. Use gross profit, not revenue: a $3,000 program with $1,200 in costs is worth $1,800.
A worked example
These numbers are made up to show the math, using the illustrative benchmark of 22 enrollments per 100 leads. They are not client results.
| Line | Value |
|---|---|
| Monthly marketing and sales cost | $6,000 |
| New leads | 100 |
| Enrolled patients (22% of leads) | 22 |
| CAC ($6,000 ÷ 22) | $273 |
| Gross profit per enrolled patient | $1,800 |
| LTV:CAC ($1,800 ÷ $273) | 6.6 : 1 |
Many operators treat 3:1 as a floor. Below it, growth gets expensive quickly.
Lower CAC without touching ad spend
The fastest way to lower CAC is conversion, not cheaper leads. In the example above, if the same 100 leads enroll 30 patients instead of 22, CAC falls from $273 to $200 on the same budget.
- Speed-to-lead and follow-up raise the lead-to-consult rate.
- Confirmations and paid evaluations raise the show rate.
- Front-desk training raises the enrollment rate.
Raise LTV
- Programs people finish.
- Memberships they keep.
- A continuation offered before every program ends.
Key takeaways
- Calculate LTV with gross profit, not revenue.
- Conversion lowers CAC faster than cheaper leads.
- The revenue model raises LTV; the front end protects CAC.