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Business Terms
LTV (Lifetime Value)
Definition
The total revenue expected from a customer over the entire business relationship.
Overview
LTV estimates the total value a customer provides. Higher LTV justifies higher acquisition costs and indicates strong customer relationships.
Example
A customer paying $100/month who stays 24 months on average has an LTV of $2,400.
Best Practices
Calculate LTV to set acquisition budgets. Work to increase LTV through retention and upselling.
Common Mistakes to Avoid
Overestimating retention
Not accounting for costs
Ignoring churn
Frequently Asked Questions
How do I increase LTV?
Improve retention, increase prices, upsell additional services, and deliver more value.