LTV
Customer Lifetime Value (CLV)
In one sentenceThe total revenue (or profit) you expect from a customer over the whole relationship.
What it means
LTV tells you what a customer is really worth, which tells you how much you can afford to spend to get one. Subscription businesses live by it.
How to use it
- Raise LTV by keeping customers longer (lower Churn), upselling and getting referrals.
- Use LTV ÷ CAC to judge whether a channel is worth scaling.
FormulaSimple LTV = average revenue per month × average months a customer stays
(Use gross margin instead of revenue for a profit-based LTV)
(Use gross margin instead of revenue for a profit-based LTV)
Related terms
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