Customer Lifetime Value (LTV) is the total revenue a business can expect to earn from a single customer across the entire relationship.
LTV = Average purchase value × Purchase frequency × Customer lifespan
A simple subscription example: ₹2,000/month × 24 months = ₹48,000 LTV. More advanced versions factor in gross margin and churn.
LTV tells you how much you can afford to spend to win a customer. The core unit-economics ratio is LTV : CAC — many operators aim for roughly 3:1. If your CAC approaches your LTV, growth is unprofitable no matter how good the marketing looks.
A commonly cited healthy target is around 3:1 — three units of lifetime value for every unit of acquisition cost. Much lower and growth is unprofitable; much higher can mean you are under-investing in growth.
Yes. LTV (lifetime value) and CLV (customer lifetime value) refer to the same concept: the total value of a customer over the relationship.
Improve retention, raise purchase frequency or order value, upsell and cross-sell, and focus on the customer segments that are naturally high value.
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