Lifetime Value (LTV)
The total revenue or profit one customer brings in on average over the entire relationship.
By Tanguy De Keyzer · Founder & digital strategist
What is LTV?
Customer Lifetime Value is the total value one customer brings in on average for as long as that customer stays. It combines how much someone spends per purchase, how often they buy and how long they remain a customer.
LTV ≈ average order value × purchase frequency × customer lifespan
Why it matters
LTV determines how much you may spend to win a customer. The higher the LTV, the more you can scale your acquisition (CAC) without loss. It shifts the focus from individual sales to long-term relationships.
The golden ratio
A sustainable business aims for an LTV:CAC of at least 3:1. Improve your retention and upsell, and your LTV rises, making every acquisition euro suddenly more profitable.
See also
From theory to growth.
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