Metrics & KPIsAlso known as: CLV, Customer Lifetime Value, CLTV
LTV
Lifetime Value - the total revenue expected from a customer over their entire relationship.
Full Definition
LTV (Lifetime Value), also known as CLV (Customer Lifetime Value), is the total revenue a business can expect from a single customer account throughout their entire relationship. It's crucial for understanding how much you can afford to spend on customer acquisition and for evaluating business health. LTV should be significantly higher than CAC for a sustainable business model.
Formula
LTV = Average revenue per customer × Average customer lifespan (or ARPU ÷ Churn rate)
Examples
- 1A customer paying $100/month for 24 months has an LTV of $2,400
- 2Netflix's LTV is estimated at $500-700 per subscriber