Definition of lifetime value (LTV)

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

Explanation of lifetime value (LTV)

LTV helps businesses understand the long-term value of acquiring and retaining customers. It considers the cumulative revenue generated by a customer over their entire engagement with the business.

Example of lifetime value (LTV)

If a subscription-based streaming service estimates that the average customer stays subscribed for 24 months and pays $10 per month, the LTV for that customer is $240.

Strategies of lifetime value (LTV)

• Customer retention: Focus on strategies to retain customers for longer periods.
• Upselling and cross-selling: Offer additional products or services to increase customer spend.
• Customer satisfaction: Improve overall customer experience to enhance loyalty.

Related terms

• Customer acquisition cost (CAC)
• Churn rate
• Average revenue per user (ARPU)
• Customer segmentation
• Retention rate