What Is LTV?

Written by Indicative Team


LTV Defined

LTV stands for lifetime value, sometimes referred to as CLTV, customer lifetime value. LTV is a marketing term used to predict the net profit over the entire future relationship with a customer. It can also be more generally defined as the monetary value of a customer based on present value and the projected future value of a customer relationship. Calculating LTV is an important marketing metric in subscription based business because it assesses the financial value of each customer and can help a business determine how to budget different areas of their company, like their marketing spend.

You can calculate this metric manually using the formula: LTV = (average customer spend) x (number of times the customer is expected to repeat the purchase over one year) x (average length of the relationship, in months or years).

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