Glossary
Customer Lifetime Value (LTV)
Customer lifetime value, or LTV, is the total revenue you can expect from one customer over the whole time they stay with you.
Formula
LTV = average monthly (or per-visit) revenue × how long a customer stays
Example
A gym member paying $150 a month who stays 12 months on average has an LTV of $1,800.
How to read it
If you raise LTV, you can afford to pay more for each new customer and outbid competitors on ads.
Why it matters
LTV is why retention matters. The longer customers stay, the more you can afford to spend to win each new one.
Common mistakes
- Using first-sale revenue as if it were lifetime value.
- Ignoring churn, which shrinks LTV quietly.
- Not separating one-time buyers from repeat customers.
How to improve LTV
- Reduce churn by checking in with customers who slip.
- Offer memberships, packages or repeat bookings.
- Remind customers when they're due to come back.
- Win back lapsed customers before they forget you.
Related: Retention calculator
Related terms
Customer Acquisition Cost (CAC)Customer acquisition cost, or CAC, is the total cost of winning one new customer, including ads and the other sales and marketing costs involved.Churn RateChurn rate is the percentage of customers or members who leave in a given period.Customer RetentionCustomer retention is how well a business keeps its existing customers coming back or staying subscribed over time.