This doesn’t work as simply as “increase AOV and keep CAC low.”
Sounds great in theory, I’ve almost never seen it work in practice.
In most cases, when you increase AOV, your CAC also rises.
Yes, higher AOV can decrease your payback period, which is great.
But it also has tradeoffs when scaling, as your audience size gets smaller at higher aovs
This is why you can’t look at metrics in isolation.
Not saying you’re doing that here, but it’s a critical reminder.
Everyone talks about CAC:LTV. Almost no one operationalizes it.
And actually it's not just CAC vs. LTV. It's really...
→ First purchase contribution margin
→ Payback period
→ LTV Margin / CAC ratio
Figuring out the math is one thing. (Comment below and I'll drop a quick tool you can use.)
But figuring out how to actually move these numbers is another.
You've got 3 levers:
1. 𝐚𝐌𝐄𝐑: Hyper focus on new AOV and CAC efficiency. Get customers to spend more on the first purchase while keeping CAC low. More dollars in your pocket, same ad spend out.
2. 𝐂𝐨𝐬𝐭 𝐬𝐭𝐫𝐮𝐜𝐭𝐮𝐫𝐞: Closely tied to the above. Price testing and bundling improve margins. Negotiating lower COGs or reducing shipping does too. Every dollar saved here improves first purchase contribution without touching ad spend.
3. 𝐋𝐓𝐕 The hardest to move, but the highest ceiling. Some of your LTV potential is baked into your product. But the first 90 days after purchase? That's your marketing window.
Focus acquisition on products with the best LTV potential and build lifecycle flows around those cohorts.
There is a clear strategy behind every number. The hard part isn't the math. It's aligning and prioritizing your team to execute on all three levers at the same time, at the highest level.
Do that? You've got a real formula for scale 🚀