Short answer
If CAC is greater than LTV, the business is paying more to acquire the customer than it expects to earn back under the active model. That can be a true unit-economics problem or a modeling problem, and you need to distinguish the two fast.
What it usually means
The ratio usually signals one or more of the following: CAC is too high, churn is too high, ARPA is too low, gross margin is too weak, or LTV assumptions are too optimistic or inconsistent.
What to verify first
- Check that LTV:CAC policy is strict.
- Check whether CAC and LTV use the same segment and attribution logic.
- Check CAC Payback Period to understand timing, not just final value.
First levers to pull
- Reduce CAC by channel discipline.
- Increase ARPA or pricing power.
- Improve gross margin.
- Reduce churn before scaling spend.