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David Skok is a five-time serial entrepreneur and venture capitalist. He developed a test to help product teams discover if they are close to their product/market fit.
David Skok states that the ideal ratio between the Customer Lifetime Value (CLV) and Customer Acquisition Cost (CAC) is 3:1. When a company get close to this ratio, it's an indication that they are close to their product/market fit.
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Customer Acquisition Cost (CAC) is the cost of getting a customer to buy a product or service.
How to calculate the metric:
Customer Lifetime Value (CLV) is the average revenue you can expect from a customer during the time they stay with you.
How to calculate the metric:
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