Skip to content
Marketing Refs
Metric

Lifetime Value (LTV)

Lifetime Value represents the total gross profit or expected contribution from a customer relationship over time.

Share this reference

Also LTV, CLV, Customer lifetime valueMarketing Refs Editorial, reviewed by Marketing Refs Review DeskAnalytics & Measurement3 sources

Formula

LTV = Average Customer Value x Average Customer Lifespan
Numerator
The primary counted outcome or cost used in Lifetime Value (LTV).
Denominator
The population, event count or time period used to normalize Lifetime Value (LTV).
Reporting window
The date range used consistently across inputs.

Worked example

If average monthly gross profit per customer is $80 and the average customer lifetime is 18 months, LTV is $1,440. For subscription businesses, use gross margin rather than revenue when possible.

LTV is most useful when the retention model is stable. Compare it with churn rate, customer retention, ARPU and CAC instead of relying on a single blended lifetime estimate.

How it works

LTV helps teams assess whether acquisition and retention economics are healthy across the full customer lifecycle.

Key takeaways

  • Use Lifetime Value (LTV) when the decision depends on metrics, attribution, experiments and financial accountability.
  • Pair Lifetime Value (LTV) with related concepts before changing strategy, budget or execution.

Where it is used

  • Forecasting
  • Budget allocation
  • Performance diagnosis

Used by Marketing teams · Growth teams · Students

Examples

  • A growth team reviews Lifetime Value (LTV) by cohort so acquisition, conversion and retention decisions use the same reporting window.
  • A channel owner compares Lifetime Value (LTV) against related metrics before changing budget, creative or funnel priorities.

Common mistakes

  • Comparing Lifetime Value (LTV) across channels without matching the reporting window.
  • Optimizing Lifetime Value (LTV) alone without checking downstream quality or customer value.

Questions

What is Lifetime Value (LTV)?
Lifetime Value represents the total gross profit or expected contribution from a customer relationship over time.
How do you calculate Lifetime Value (LTV)?
Calculate Lifetime Value (LTV) with a consistent reporting window, clear inputs and enough context from adjacent metrics before making budget or strategy decisions.
What is a practical example of Lifetime Value (LTV)?
A growth team reviews Lifetime Value (LTV) by cohort so acquisition, conversion and retention decisions use the same reporting window.

Sources

NextLTV vs MRR

Compare