LTV
Lifetime Value
How much revenue (or profit) a customer generates during the entire time they stay a customer.
What it is
LTV estimates the total value a customer brings to the business, not just from the first purchase. It's essential for knowing how much is worth spending to win that customer (see CAC).
LTV ≈ Average ticket × Purchase frequency × Relationship length
Where else it shows up
💰 Finance
Used in recurring revenue projections and to justify investment in retention.
Example: Cutting churn by 5% can raise the average LTV of the base by far more than an acquisition campaign would.
🧩 Product
Guides retention decisions: features that increase usage time increase LTV.
Example: The product team prioritizes an onboarding feature because it increases the customer's average time on the platform.
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