Question 1

What is a good LTV to CAC ratio for senior living?

Accepted Answer

While it varies, a healthy target for a sustainable business model is a 3:1 ratio—meaning a resident's lifetime value is three times the cost of acquiring them. A ratio of 4:1 or 5:1 is excellent and indicates a very strong market position and efficient operation.

Question 2

How do I calculate my 'Acquisition Cost' (CAC)?

Accepted Answer

To calculate CAC, sum up all your sales and marketing expenses over a specific period (e.g., a quarter or a year). This includes ad spend, sales salaries/commissions, marketing staff salaries, and the cost of events. Then, divide that total by the number of new residents who moved in during that same period.

Question 3

What's the easiest way to increase my LTV?

Accepted Answer

The most powerful lever for increasing LTV is to increase the average length of stay. Even a small increase of one or two months can have a massive impact on LTV. This highlights the immense financial value of investing in resident satisfaction, quality care, and community engagement to keep residents happy and healthy.

Question 4

Should I calculate LTV for each care level separately?

Accepted Answer

Yes, if possible. The LTV for an independent living resident (typically lower monthly profit but much longer stay) can be very different from a memory care resident (higher monthly profit but shorter stay). Calculating it separately gives you a much more accurate picture and allows you to set different acquisition cost targets for each.

Question 5

My LTV is lower than my CAC. What should I do?

Accepted Answer

This is a critical situation that indicates your business model is unprofitable. You must take immediate action. The two options are to drastically reduce your CAC (e.g., cut inefficient marketing channels) or find ways to increase your LTV (e.g., raise rates, introduce new ancillary services, or implement a major resident retention program).

Resident Lifetime Value (LTV) Calculator

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Understanding Resident LTV

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