Customer Lifetime Value (LTV or CLV)

Definition

The total profit a company can expect from a single customer over their entire relationship—your best argument for spending money today.

Example Usage

Our LTV is $2,400 per customer, which justifies a $300 customer acquisition cost.

Origin

Concept formalized in marketing literature during the 1980s-1990s, critical to modern SaaS.

Fun Fact

Increasing customer retention by 5% can increase profits by 25-95%, making it worth more than most new customer campaigns.

Source: Customer lifetime value and retention economics

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