Customer Lifetime Value (LTV): How to Calculate and Use It
LTV estimates the total value a customer brings over their relationship with you. It tells you how much you can afford to spend to acquire and keep customers.
Quick version: LTV is the total value a customer brings over time — it tells you how much you can afford to spend to win and keep them.
Why it guides everything
LTV sets the economics of growth. If a customer is worth far more than they cost to acquire, you can invest confidently; if not, you have a problem to fix. The fastest way to raise LTV is usually retention — keeping customers longer and increasing repeat purchases.
Tracking LTV against acquisition cost is one of the clearest signals of a healthy, data-driven business.
Frequently asked questions
What is customer lifetime value?
Customer lifetime value (LTV or CLV) is an estimate of the total revenue or profit a customer generates over the course of their relationship with your business.
Why is LTV important?
Because it tells you how much you can afford to spend to acquire and retain customers. Compared with acquisition cost, it reveals whether your growth is sustainable.
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