Customer Lifetime Value
Customer Lifetime Value (LTV or CLV) is the total revenue or profit a business expects to earn from a single customer across the entire relationship. It captures repeat purchases and retention over time, helping teams judge how much they can afford to spend acquiring and keeping each customer.
A common way to estimate LTV is to multiply average purchase value by purchase frequency and average customer lifespan; subscription businesses often divide average revenue per account by the churn rate. Using gross margin instead of raw revenue gives a more honest, profit-based figure.
LTV is most meaningful next to Customer Acquisition Cost; many teams target an LTV-to-CAC ratio around 3:1. A common pitfall is treating LTV as fixed, it shifts with churn, pricing, and upsells, so it should be revisited regularly rather than set once.
Last updated: 14 June 2026