What is Customer Lifetime Value (LTV)?
Customer lifetime value (LTV or CLV) is the total profit a business expects to earn from a customer over the entire relationship. It combines how much a customer spends, how often, and how long they stay, giving a forward-looking measure of what each customer is worth.
Reviewed by Gensudo Team · 23 July 2026
In more depth
LTV is typically derived from average revenue per customer, gross margin and expected lifespan, which retention and churn drive. It is an estimate, sensitive to assumptions about how long customers remain, so teams often calculate it per segment and revisit it as data accrues. Its main use is comparative, judged against customer acquisition cost to test whether the unit economics genuinely work.
Why it matters
LTV reframes retention and pricing as economic levers rather than abstract metrics: a small improvement in churn or expansion revenue can transform lifetime value and, with it, how much a company can afford to spend acquiring customers. Understanding LTV by segment also reveals which customers are worth pursuing and which quietly cost more than they return.
A product example
A subscription app finds customers pay 12 a month at 80% margin and stay 20 months on average, giving an LTV near 190. Reducing early churn to extend the average lifespan to 26 months raises LTV by roughly a third, with no price increase at all.
Documents where this shows up
Business Case for Heads of Product · Product-Market Fit Assessment for Product Managers
Related terms
Customer Acquisition Cost (CAC) · Retention Rate · Churn Rate · North Star Metric