What is: Lifetime Value

Lifetime value (LTV) is a marketing term used to calculate the potential future revenue associated with a particular customer or client.

LTV is determined by multiplying the average customer lifetime by the average customer value. This calculation provides a snapshot of the total revenue a business can expect to generate from a current or past customer.

Small businesses can use LTV as a tool to identify and prioritize customers based on their perceived long-term value.

Additionally, LTV can help businesses determine whether to focus on acquiring new customers or retaining current ones. Ultimately, understanding and calculating LTV is important for small businesses as it allows them to gauge the success of their marketing efforts and make data-driven decisions about where to allocate their resources.