LTV

LTV (Lifetime Value) is the total profit a company expects to receive from a customer over their entire customer life cycle. This metric is key to assessing the long-term value of customer relationships and making strategic decisions in marketing, sales, and service.
The formula for calculating LTV is usually presented as the product of average sales revenue and the average number of purchases per customer over their entire customer life cycle. This allows businesses to predict the total value of each customer and determine how much investment in customer acquisition and retention is justified.
Literally, LTV means “lifetime value” of the customer. By analyzing this metric, companies can optimize marketing campaigns, increase customer loyalty, and improve return on investment. Understanding LTV is the foundation for building sustainable business models based on long-term customer relationships, not just short-term sales.