LTV
Definition
Lifetime Value -- the total revenue a business expects to earn from a single customer account over the entire duration of the relationship.
LTV (also called CLV or CLTV) is calculated by multiplying the average revenue per account by the gross margin and the average customer lifespan. It helps companies understand how much they can afford to spend on acquisition and which customer segments are most profitable. Improving LTV involves increasing retention, driving expansion revenue, and reducing support costs. The LTV:CAC ratio is a fundamental SaaS health metric.
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FAQ
What does LTV mean?
LTV (also called CLV or CLTV) is calculated by multiplying the average revenue per account by the gross margin and the average customer lifespan. It helps companies understand how much they can afford to spend on acquisition and which customer segments are most profitable. Improving LTV involves increasing retention, driving expansion revenue, and reducing support costs. The LTV:CAC ratio is a fundamental SaaS health metric.
What are the best LTV tools?
Top tools related to LTV: Tinybird, Hightouch, Mixpanel, Amplitude, ChartMogul.