lifetime value

Definition

The predicted total revenue a customer will generate over their entire relationship with your business, used to justify spending obscene amounts on acquisition. Abbreviated as LTV or CLV, because marketers love acronyms almost as much as optimistic financial projections.

Example Usage

With an LTV of $5,000 per customer, we can afford to spend $1,500 on acquisition and still look like financial geniuses to investors.

Origin

Database marketing terminology from the 1980s, became crucial for subscription businesses

Fun Fact

Amazon allegedly operated at a loss for years because they calculated that a Prime member's LTV exceeded $3,000—turns out they were right, which is why Jeff Bezos has a rocket company now.

Source: Customer relationship management and financial modeling

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