What is LTV?

Customer Lifetime Value (LTV) is a prediction of the net profit attributed to the entire future relationship with a customer. It represents the total amount of money a customer is expected to spend on your products or services during their relationship with your business.

Why LTV Matters

LTV is one of the most important metrics for business sustainability and growth. It helps you:

• Determine how much you can afford to spend on customer acquisition
• Identify your most valuable customer segments
• Make data-driven decisions about marketing investments
• Forecast future revenue and business growth
• Evaluate the long-term health of your business

When to Use LTV

LTV is most valuable when:

• Setting customer acquisition cost (CAC) targets
• Segmenting customers for targeted marketing
• Evaluating the effectiveness of retention strategies
• Making decisions about product development and pricing
• Seeking investment or funding (investors closely examine LTV:CAC ratios)