Jan 6, 2026
Lifetime Value
LTV
The predicted total revenue a customer will generate over their entire relationship with your business. Also called CLV or CLTV.
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Formula:
AOV × Purchase Frequency × Customer Lifespan
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Benchmarks
Varies entirely by business model. SaaS: monthly value × avg months retained. E-commerce: AOV × orders/year × years active.
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Why It Matters
LTV determines how much you can afford to pay for a customer. If LTV is $500, spending $100 to acquire (CAC) is profitable. Most businesses underestimate LTV and underspend on acquisition. Calculate by cohort, not average.
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