If you’ve been following along with the last couple of episodes, you already know I’ve been on a bit of a mission to break shop owners out of the “advertising as a percentage of sales” mindset. It’s an easy shortcut, sure—but it rarely tells you whether your advertising is actually working. If you want real clarity, you need to understand two numbers that almost no one in our industry talks about: Customer Acquisition Cost (CAC) and Lifetime Customer Value (LTV).

These two metrics are the backbone of truly understanding the value of your advertising. And once you understand them, the lightbulb goes on. Suddenly, whether an ad is “expensive” or “cheap” becomes irrelevant. All that matters is this: Does the value of a customer exceed the cost of acquiring them?

Your First Key Number: CAC

CAC is simple. It’s how much you spend to bring in a brand-new customer. If you spend $5,000 on advertising and get 10 new customers? Your CAC is $500.

The mistake a lot of shop owners make is looking only at the cost of the ad itself. “I’m not dropping that billboard—it’s only $600 per month!” But if that billboard is only bringing in one new customer, your CAC is $600. Compare that to spending $2,000 on Google Ads that brings in 10 customers—now your CAC is $200.

If you’re judging based on the ad price instead of the cost per customer, you’re flying blind.

Your Second Key Number: LTV

This is where things get fun. Most shops undervalue what a customer is actually worth over their lifetime with the shop. And no, “lifetime” doesn’t mean how long they’re on this planet—it means how long they stay with you.

Let’s take a very realistic example:

• Average Repair Order: $500

• Visits per year: 2

• Years they stay with you: 3

• Gross profit: 50%

That gives you an LTV of $1,500.

Meaning: the average customer will bring you $1,500 in gross profit before they move on.

Now compare that to your CAC. If you’re spending $500 to acquire a customer who brings you $1,500 in profit over time, that’s a 3X return. Year one, you basically break even. Year two and three? Pure profit.

But let’s say you have an advertising source that brings in customers who don’t come back after the first visit. Suddenly, that entire model collapses. That’s exactly why something like Groupon never works—you get customers who come in for the deal and never return. Lifetime value? Zero.

The End Goal: Low CAC, High LTV

If you really want to scale your shop profitably, your focus should be on pushing these two numbers in opposite directions:

• Lower your CAC (spend smarter, not necessarily more)

• Increase your LTV (better experiences, better retention, better follow-up)

And here’s the secret most profitable shops already know:

Referrals are the holy grail. A customer acquired for $0 who stays with you for 10+ years? That’s an unbeatable ratio.

This is why some shops barely advertise at all—they’ve built a machine where customers stay forever and bring their friends.

Wrapping Up

Understanding CAC and LTV isn’t just a marketing exercise. It’s how you build a scalable, profitable shop that isn’t trapped in the cycle of constantly chasing new customers. Master these numbers, and your entire approach to advertising changes for the better.