SYS/DEF
LTV
Lifetime value: expected margin from a customer over their life, not GMV of the first basket.
Definition
LTV (or CLV) is the economic value of a customer over the horizon you assume: sum of future margins, optionally discounted. A naïve recipe — AOV × frequency × duration × margin — is a model, not a measurement. Without retention, margin, and horizon, the number is a slogan.
It is distinct from first-purchase revenue. A €49/month SaaS churned at M2 does not have the LTV of a €49/month customer retained 24 months.
When it matters
To judge a CAC, a channel, a trial offer. A CRO test that increases low-intent signups can lower LTV while raising CVR — the A/B dashboard is green, the economics are not.
The LTV:CAC ratio and payback are the board readout; LTV alone is an orphan numerator.
Pitfalls
Using GMV instead of margin. Projecting 36 months with month-one churn. Mixing acquisition cohorts. Discounting… or not, depending on what helps the ratio. Computing a site-wide average LTV when the test only touches a segment.
Related terms
Related tool
The ratio and months until payback, not a disguised A/B: Open LTV:CAC and payback.