Compares the Average Gross Margin Lifetime Value to the Customer Acquisition Cost. Indicates how much revenue is generated for every dollar spent on acquiring a customer and on the product, wioth higher ratios showing more efficient customer acquisition.
Example: An average gmLTV12/CAC ratio > 1 means the typical cohort is profitable including COGS and CAC after 12 months, while a ratio < 1 means the cohort has not yet achieved payback.
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