Definition
The total revenue a business expects to earn from a customer over the entire duration of their relationship.
Why it matters for growth
LTV sets the ceiling for how much a company can afford to spend acquiring a customer while still remaining profitable.
Example
A customer paying $50 a month who stays for 24 months on average has an LTV of $1,200.
FAQ
- What is Customer Lifetime Value (LTV)?
- The total revenue a business expects to earn from a customer over the entire duration of their relationship.
- Why does Customer Lifetime Value (LTV) matter for growth?
- LTV sets the ceiling for how much a company can afford to spend acquiring a customer while still remaining profitable.
- What is an example of Customer Lifetime Value (LTV)?
- A customer paying $50 a month who stays for 24 months on average has an LTV of $1,200.