- A.The total cost — sales, marketing, content, technology — divided by new customers acquired. The denominator of the LTV/CAC ratio.
- B.Tracking customers grouped by acquisition period to compare retention, revenue, and behavior over time — exposes trends that aggregated data hides.
- C.Customer Lifetime Value divided by Customer Acquisition Cost — the dominant unit-economics metric for evaluating customer-acquisition efficiency. ✓
- D.Customer Lifetime Value divided by Customer Acquisition Cost — the dominant unit-economics metric for evaluating customer-acquisition efficiency.
LTV/CAC Ratio is customer Lifetime Value divided by Customer Acquisition Cost — the dominant unit-economics metric for evaluating customer-acquisition efficiency. The other options describe related but distinct concepts in Digital & Analytics — see the deep-dive guide for the full distinction.
How to think about questions like this
Tells you whether your business model works at scale. Questions like this test whether you can distinguish LTV/CAC Ratio from neighboring concepts. The most common trap is choosing a closely-related concept that sounds similar but applies in a different context.
When you see a definition question on an exam, do two things: (1) translate the question into your own words, then (2) generate the answer in your own words before reading the options. This avoids the cognitive bias of recognizing a familiar phrase as correct just because it is familiar.