Lifetime Value (LTV), or Customer Lifetime Value (CLTV), is the total revenue a customer is expected to generate over the entire duration of their relationship with a business. It’s a key metric for understanding long-term customer profitability.

Data-driven LTV helps businesses optimize acquisition costs and focus on high-value customers for sustained growth.

Formula:
LTV = (Average Purchase Value) × (Purchase Frequency) × (Customer Lifespan)

Benefits:

• Helps identify high-value customers.
• Guides marketing spend and customer acquisition strategies.
• Optimizes retention efforts.
• Supports business growth by focusing on long-term customer value rather than short-term sales.