Chewy’s LTV to CAC is 2.4x for a 3 year old cohort — not great. Chewy doesn’t disclose CAC or LTV individually, but does disclose the ratio. The chart below shows the 2015 and 2014 cohorts seemingly performing better than the 2016 and perhaps the 2017 cohorts. According to Chewy’s prospectus “We measure LTV on a rolling three-year basis, which, as a multiple of acquisition cost, was 2.4x for our most recent 2015 cohort, and continues to grow as it ages. We have included a chart below that shows the ratio of LTV to CAC for the 2012–2017 cohorts. Our most recent cohorts had similar behavior for ordering our products as prior cohorts.” Older cohorts are performing slightly better than new cohorts for Chewy, but that’s not unusual (early adopters are typically cheaper to acquire).
Angie’s List had stable CAC, while tripling marketing spend. Angie’s List, an online review site with memberships, had very little change in CAC from 2009 to 2011 with CAC of $74, $85, and $78. Over the same period, paid memberships went from 411k to 1.1mm and marketing expense rose from $16mm to $56mm. In other words, marketing expense more than tripled but CAC stayed the same. That’s remarkable scale.
LegalZoom’s payback is 90 days. We couldn’t find LTV and CAC data, but payback period information is just as valuable. “We deploy a disciplined customer acquisition strategy that has allowed us to generate lifetime value in excess of customer acquisition costs within the first 90 days of establishing a customer relationship in the United States. As we continue to invest in customer acquisition costs to grow our business, we look to do so efficiently. We aim to achieve a ratio of lifetime value to customer acquisition costs of approximately 3x within 25 months of customer acquisition, and approximately 5x within 96 months of customer acquisition. Many of our subscribers have increased their cumulative spend with us over time as they have expanded their use of our platform to include additional products and subscription services. Our relationship with our small business customers typically starts with the formation of their business, and we can generate additional revenue as their businesses grow and their needs become more complex.”
Robinhood’s payback has improved. “For the monthly cohorts in the year ended December 31, 2019, our average revenue payback period was approximately 13 months, and for the monthly cohorts in the year ended December 31, 2020, our average revenue payback period improved to less than five months. Our average cost to acquire a new Funded Account declined by more than 60% from $53 in fiscal 2019 to $20 in fiscal 2020.” Their cohort growth is also fantastic (see below).