Also known as: LTV, CLV, lifetime value
Customer lifetime value (LTV, sometimes CLV) is the total revenue you expect to earn from a customer over the entire length of your relationship with them, not just their first purchase. It captures repeat business, renewals, and expansion over time. LTV is a foundational metric because it tells you how much a customer is really worth — and therefore how much you can afford to spend to acquire one and still profit.
LTV only becomes powerful when paired with customer acquisition cost (CAC) — what it costs you to win a customer. The ratio of LTV to CAC tells you whether your growth is healthy: if a customer is worth far more over their lifetime than it costs to acquire them, you can afford to invest aggressively in sales and marketing. If LTV barely exceeds CAC, growth is fragile. This is why knowing LTV shapes how much you can justify spending on outreach, ads, and sales effort.
Because LTV reflects the whole relationship, retention and expansion drive it as much as the initial sale. Keeping customers longer, reducing churn, and growing accounts over time all increase LTV — often more cheaply than acquiring new customers. This is where a CRM earns its keep beyond the initial sale: tracking the relationship, surfacing renewal and expansion moments, and preventing the silent churn that quietly caps lifetime value.
LTV reframes customers as long-term relationships rather than one-time transactions, and it sets the ceiling on what you can spend to acquire them. Understanding it is what makes acquisition spending — and retention investment — rational rather than guesswork.
At its simplest, LTV estimates the total revenue from a customer across the whole relationship — factoring in average purchase value, how often they buy, and how long they stay. It's then compared to customer acquisition cost (CAC) to judge whether growth is profitable.
It tells you how much a customer is really worth over time, which sets how much you can afford to spend to acquire one. A healthy LTV-to-CAC ratio means you can invest aggressively in growth; a thin one means growth is fragile.
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