Analytics & Metrics

LTV

Quick answer

Lifetime value - total profit a customer generates across the relationship.

Definition

LTV (or CLV) projects the net profit from a customer over their full relationship: order value x frequency x lifespan x margin. Honest LTV uses contribution margin, not revenue. Every bid, budget and discount decision should be tested against it.

Why it matters

LTV is the ceiling on CAC. Know it and you can outbid every competitor who is guessing.

Formula

Avg order value x Purchases per year x Years x Margin

Benchmarks

Target LTV:CAC of 3:1; below 1.5:1 growth destroys value

All glossary terms

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