What is LTV (Lifetime Value)?
LTV (Lifetime Value) is the total revenue a business can expect to earn from a customer over the entire duration of their relationship. It helps evaluate long-term profitability and guides decisions on customer acquisition costs.
Table of Contents
Full Definition
Calculating LTV enables businesses to understand the value each customer brings over time.
It informs marketing spend limits and retention priorities.
A higher LTV indicates strong customer loyalty and recurring revenue potential.
Examples
Measures customer profitability
Guides acquisition spending
Supports retention strategies
Benefits
Estimations can be complex
Requires quality data on churn and revenue
May vary significantly by segment
Common Mistakes
Continuously update LTV calculations with fresh data.
Conclusion
Continuously update LTV calculations with fresh data.