What Is Customer LTV
Value over the relationship.
Defining Customer LTV
Customer Lifetime Value (LTV or CLV) is the total net profit a business expects to earn from a single customer across the entire relationship.
It reframes marketing from a cost-per-sale view to a relationship-value view. A customer who buys once is worth far less than one who returns for years, even if both made the same first purchase.
Why LTV Matters
LTV sets the ceiling on what you can profitably spend to acquire a customer. If a customer is worth 300, paying 120 to acquire them is sustainable; paying 350 is not.
The core sustainability test compares LTV to Customer Acquisition Cost (CAC). Healthy SaaS and DTC businesses target an LTV:CAC ratio of roughly 3:1 or higher.
LTV:CAC ratio = LTV / CAC
Example: LTV 300, CAC 100 -> ratio 3.0 (healthy)
LTV 300, CAC 250 -> ratio 1.2 (unsustainable)All lessons in this course
- What Is Customer LTV
- Calculating LTV
- Predictive Segments
- Acting on Predictions