---
id: "prereq-cac-ltv"
type: "prereq"
source_timestamps: ["§ What This Means for Retail Leaders", "¶5"]
source_title: "The Comeback of the Physical Store—and What It Means for Your Business"
source_url: "https://hbr.org/2026/04/the-comeback-of-the-physical-store-and-what-it-means-for-your-business"
tags: ["unit-economics", "marketing-finance"]
related: ["concept-omnichannel-metrics", "concept-dtc-stall"]
reason: "To understand why the DTC model is failing and why omnichannel metrics are necessary, the reader must grasp how CAC and LTV dictate business viability."
sources: ["tail1"]
sourceVaultSlug: "hbr-seg-tail1"
originDay: 1
articleStem: "hbr-tail-114-comeback-physical-store"
sourceUrl: "https://hbr.org/2026/04/the-comeback-of-the-physical-store-and-what-it-means-for-your-business"
sourceTitle: "The Comeback of the Physical Store—and What It Means for Your Business"
---
# Understanding of CAC and LTV

**Why it's required:** To understand why the [[concept-dtc-stall|DTC model is breaking down]] and why [[concept-omnichannel-metrics|omnichannel metrics]] are necessary, the reader must grasp how **Customer Acquisition Cost (CAC)** and **Lifetime Value (LTV)** dictate business viability.

- **CAC** — the fully-loaded cost to acquire one customer (paid media, discounts, tooling). When digital CPC rises 40–50% ([[claim-digital-cac-rise]]), CAC balloons.
- **LTV** — the total margin a customer generates over their relationship.

DTC viability collapses when CAC approaches or exceeds LTV. The whole argument for the store as a cheaper acquisition channel rests on this ratio.