Lifetime Value (LTV)
Total revenue you earn from one customer across their entire relationship with you.
What it is
LTV = total revenue you'll earn from a customer over the full relationship. Includes initial purchase, expansion, renewals. Net of refunds.
How to calculate
For subscription: avg monthly revenue × avg months retained. For DTC: avg order value × avg orders per customer × repeat rate. Get it wrong and your CAC math lies.
Why it matters
LTV determines what you can spend to acquire. Companies w/ high LTV can afford expensive paid channels. Low LTV = needs organic or referral.
How to grow LTV
Three levers: raise price, increase order frequency, extend retention. Each pulls different signals, pricing band research, customer voice, churn analysis.
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