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.

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

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

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

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

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

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