Meaning of LTV (Lifetime Value)

Simple definition

Lifetime Value (LTV) is the total revenue a business expects to earn from a customer during their entire relationship.

How to use LTV (Lifetime Value) in a professional context

Businesses use LTV to measure customer profitability and plan strategies for customer retention and acquisition.

Concrete example of LTV (Lifetime Value)

A subscription service calculates that each customer, on average, spends $120 over 12 months. This $120 is the LTV.

Why is LTV important?

It helps businesses understand the long-term value of customers and optimize spending on acquisition and retention.

How is LTV calculated?

Multiply the average purchase value by purchase frequency and the expected customer lifespan.

What impacts LTV?

Factors like customer satisfaction, loyalty, and frequency of purchases.
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