The total revenue a business can expect to earn from a single customer over the entire span of their relationship with the company.
Why it matters
LTV is the other half of the CAC equation — a business is healthy when LTV substantially exceeds CAC, and struggling when the two are close or inverted. LTV also helps justify how much a business can reasonably afford to spend to acquire a customer in a given segment.
In a sentence
"Customers acquired through referral had a noticeably higher LTV than those acquired through paid search, which changed how we allocated budget."
Related terms
- Antonyms: CAC (the cost to acquire a customer, discussed as a ratio against LTV rather than a true opposite).
- Often confused with: AOV (LTV accounts for a customer's entire relationship with a business; AOV measures a single transaction).
- Synonyms: Customer lifetime value, CLTV.