LTV stands for “lifetime value” in marketing. It is a metric used to estimate the total value that a customer will bring to a business over their lifetime. LTV is calculated by multiplying the average purchase value by the number of purchases a customer is expected to make over their lifetime.
LTV is an important metric for businesses because it helps them understand the potential value of acquiring a new customer. It also helps them determine how much they can afford to spend on customer acquisition, such as on advertising and marketing campaigns. By understanding LTV, businesses can optimize their marketing efforts to acquire and retain customers who are likely to generate the most revenue over time.
It’s also important to note that LTV can vary significantly by customer segment, product or service, and time period. Businesses should track LTV over time and by segment to get a more accurate picture of the value of their customers and make better decisions.