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    The LTV/CAC Stratification Model

    Four levels of analytical power — developed by Lech Kaniuk

    What Is the Stratification Model?

    The LTV/CAC Stratification Model defines four levels of analytical depth for understanding your customer economics.

    Most companies operate at Level 1 — basic averages. They have no idea what's hiding beneath the surface.

    The companies that dominate their markets operate at Level 3 or 4. They see reality earlier than everyone else.

    The Four Levels

    Level 1: Basic

    The napkin view

    • •Track ARPU, churn, and a single average CAC
    • •Enough to survive, not enough to optimize
    • •Averages hide danger

    Limitation: High-value customers and low-value customers are blended into one number. Profitable channels subsidize unprofitable ones invisibly.

    Level 2: Adjusted

    The segmentation upgrade

    • •CAC and LTV broken down by channel, cohort, and segment
    • •Reveals which channels bring customers who stay longer and spend more
    • •Budget allocation becomes economic, not political

    Limitation: Time value of money is still missing. A customer paying over 2 years looks the same as one paying tomorrow.

    Level 3: Strategic

    The investor's view

    • •Full cost structures, time-adjusted ROI, NPV of customers
    • •Cash flow timing matters. Payback periods matter. Capital intensity matters.
    • •This is where illusions disappear.

    Reality check: At this level, a deal that looks profitable on paper can become unattractive once you account for delayed cash and capital tied up.

    Level 4+: Predictive

    The AI-powered advantage

    • •Machine learning predicts individual customer LTV, churn risk, and next best actions
    • •Acquisition spend adjusted dynamically based on predicted value
    • •Retention efforts targeted where they matter most

    The edge: Companies at this level don't respond to the market. They shape it.

    Why This Matters

    I once met a founder managing millions in growth budget.

    I asked: "How do you calculate CAC?"

    Answer: "We divide total marketing spend by total customers."

    That was it. No segmentation. No channels. No cohorts.

    They were operating at Level 1 while spending at Level 4 scale.

    It's like driving a Formula 1 car blindfolded.

    Where Are You?

    • Level 1:You know your blended CAC and LTV.
    • Level 2:You know them by channel and segment.
    • Level 3:You incorporate time value and full costs.
    • Level 4:You predict individual customer value before they buy.

    Most companies are at Level 1. The winners operate at Level 3+.

    What's in the Full Framework

    In "The Two Numbers That Build or Break Every Business," you'll find:

    • How to assess your current level honestly
    • The specific steps to move from Level 1 → 2 → 3 → 4
    • What data infrastructure you need at each level
    • Case studies of companies at each level
    • When Level 3 is enough vs. when to invest in Level 4
    • The common mistakes that keep companies stuck at Level 1
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    Cite This Framework

    Attribution:

    "The LTV/CAC Stratification Model, developed by Lech Kaniuk and detailed in 'The Two Numbers That Build or Break Every Business'..."

    See also:

    Value Driver Framework|LTV-CAC Growth Map|Alignment Protocol