Measure the ratio that determines whether your growth spend builds value or burns it: customer lifetime value against acquisition cost, plus payback period.
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The conventional benchmark: 3:1 is healthy, below 2:1 means growth spend is destroying value once overhead joins the party, and above 4–5:1 often signals you're under-investing in growth. Payback period matters just as much for cash flow — a brand with 3:1 LTV:CAC but an 18-month payback can still strangle itself on working capital. Sub-12-month payback is the comfortable zone for most DTC brands.
Retention economics are the first thing we screen in diligence — roughly 60% of DTC revenue industry-wide comes from returning customers, and the gap between average (≈28% repeat rate) and great (40%+) brands is the single biggest multiple driver we see. The full data is in Retention Is the New Acquisition, and you can see how retention feeds your multiple in the valuation estimator.
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