Consulting Firms—Don’t Sleep on this Emerging Marketing KPI: LTV:CAC by Channel

For years, consulting firms have measured marketing success with the same familiar metrics: Cost Per Lead, Conversion Rates, and Pipeline Growth. These numbers are useful, but they often miss the bigger picture. Consulting is (fingers crossed) built on long-term client relationships and repeat engagements, not one-off transactions. That’s why a new KPI is gaining traction:

Customer Lifetime Value to Customer Acquisition Cost Ratio (LTV:CAC) by Channel.

Moving Beyond Leads to Value

Traditional KPIs answer how many leads we generated but not whether those leads turn into profitable clients. A firm might celebrate acquiring ten new clients through LinkedIn ads, only to find that most engagements are small, short-term projects. Meanwhile, a single webinar might bring in two clients who become multi-year partners worth hundreds of thousands of dollars. LTV:CAC by Channel reframes the question. It measures not just the cost to acquire a client, but how much long-term value that client is expected to deliver.

Formula Details:

• Lifetime Value (LTV): Average annual revenue × retention years × gross margin

• Customer Acquisition Cost (CAC): Marketing + sales spend ÷ clients acquired

• LTV:CAC Ratio: LTV ÷ CAC.

Industry-wide, a healthy ratio is typically 3:1 or higher, or...every $1 spent on acquisition should return at least $3 in lifetime value.

A Three-Channel Example

Imagine a consulting firm wants to test three marketing channels: webinars, paid LinkedIn campaigns, and trade shows.

1. Webinars: The firm spends $5,000 hosting and promoting a session and signs two clients. Each client averages $85,000 annually, stays three years, and delivers a 60% margin.

   • LTV = 85,000 × 3 × 0.6 = $153,000

   • CAC = 5,000 ÷ 2 = $2,500

   • LTV:CAC = 61:1 (extremely strong)

     
     

2. LinkedIn Ads: The firm spends $20,000 on campaigns and signs ten clients. Each client averages $25,000 annually, stays three years, with a 55% margin.

   • LTV = 25,000 × 3 × 0.55 = $41,250

   • CAC = 20,000 ÷ 10 = $2,000

   • LTV:CAC = 20.6:1 (healthy)

     
     

3. Trade Shows: The firm spends $50,000 on booth fees, travel, and sponsorships. From that, they sign one client worth $40,000 annually, staying two years, with a 50% margin.

   • LTV = 40,000 × 2 × 0.5 = $40,000

   • CAC = 50,000 ÷ 1 = $50,000

   • LTV:CAC = 0.8:1 (unhealthy)

Why Does LTC:CAC Matter?

Without LTV:CAC, firm leadership might look at the trade show and say, “Wow! We closed a new client, let's celebrate!” But the ratio reveals the firm actually lost money acquiring that client. In consulting, where margins and client stickiness drive growth, an LTV:CAC below 2:1 is a red flag. It signals the firm is overspending to win clients who won’t sustain profitability.

On the flip side, webinars and LinkedIn campaigns look extremely efficient. Not only do they bring in new business, but they're delivering profitable, long-term clients.

Getting Started

• Track by channel. Don’t just measure overall LTV:CAC, break it down by webinar, referral, event, or ad spend.

• Integrate CRM and finance data. Marketing attribution alone won’t cut it; you need revenue and retention history.

• Recalculate quarterly. Consulting sales cycles are long, but updating every 3–4 months keeps the picture current.

The Last Word

Consulting firms pride themselves on helping clients uncover hidden insights. It’s time to apply the same lens internally. LTV:CAC isn’t just another marketing metric, it’s a profitability compass. It reveals which activities generate not just leads, but long-lasting, profitable client relationships as well as which clients quietly drain resources.

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