Customer Lifetime Value (CLV) or Lifetime Value (LTV), Lifetime Customer Value (LCV)

In marketing, LTV (Lifetime Value), also known as Customer Lifetime Value (CLV), is a metric that predicts the total revenue a business can expect to receive from a single customer over their entire relationship with the company. LTV helps businesses understand the long-term value of their customers, guiding decisions on marketing strategies, customer acquisition costs, and strategies to improve customer retention and profitability.

Why LTV is Important

Informed Marketing Strategies: LTV helps businesses understand which marketing campaigns attract the most valuable customers, allowing them to optimize their spending.

Profitability: By measuring the total revenue from a customer over their lifetime, businesses can more accurately assess long-term profitability.

Customer Acquisition Cost (CAC): LTV is used to evaluate the return on customer acquisition costs, ensuring that the cost to acquire a customer does not exceed their lifetime value.

https://www.thedigitalorbis.com/2025/10/cac-customer-acquisition-cost.html

Customer Retention: Understanding LTV highlights the importance of customer retention and can reveal insights into what keeps customers engaged and loyal.

How to Calculate LTV

There are several formulas to calculate LTV, with a common one being:

LTV = Average Order Value × Purchase Frequency × Customer Lifespan

Average Order Value: The average amount a customer spends per transaction.

Purchase Frequency: How often a customer makes a purchase within a given timeframe.

Customer Lifespan: The total duration of the customer's relationship with the business.

For businesses with a subscription model, a different formula may be used, focusing on monthly recurring revenue and churn rate: LTV = (Average Monthly Revenue per Customer × Gross Margin %) / Monthly Churn Rate

https://www.appsflyer.com/glossary/ltv/

Comments

Product Roadmap - Key things

What is a Product Roadmap? A product roadmap is a plan of action for how a product or solution will evolve over time . Product owners use roadmaps to outline future product functionality and when new features will be released. A product roadmap is a shared source of truth that outlines the vision, direction, priorities, and progress of a product over time. It's a plan of action that aligns the organization around short and long-term goals for the product or project, and how they will be achieved. Key Things In A Product Roadmap Prod uct Vision This is critical as it sets your company on the path to creating a specific product strategy. It is the vision of what is desired and the potential that it has to be a great product. This initial vision doesn’t have to be the final one but it starts the process of building a product roadmap so that further planning can continue. This spells out what you want your product to be at the end of the project. Strategy This is the case you build...

Product Lifecycle Management PLM

Product Lifecycle A product life cycle is the length of time from a product first being introduced to consumers until it is removed from the market . The concept of product life cycle helps inform business decision-making , from pricing and promotion to expansion or cost-cutting . (advertising, reduce prices, expand to new markets, or redesign packaging.) A company often incurs higher marketing costs when introducing a product to the market but experiences higher sales as product adoption grows. Sales stabilize and peak when the product's adoption matures, though competition and obsolescence may cause its decline. A product's life cycle is usually broken down into four stages; introduction , growth , maturity , and decline . Product Life Cycle 1. Introduction Stage The introduction phase is the first time customers are introduced to the new product. A product begins with an idea, and within the confines of ...

Digital Marketing

Digital Marketing Digital marketing is the promotion of a product or a brand through a one or more forms of electronic media such as the Internet, mobile phones, Google, search engine marketing etc. It is a way to reach clients on time and retain them with interactive marketing using digital technology. Digital Marketing Channels https://digitalorbis.blogspot.com/2023/05/content-marketing-digital-marketing.html https://digitalorbis.blogspot.com/2023/03/seo-audit-analysis-technical-checklist.html https://digitalorbis.blogspot.com/2023/04/ppc-pay-per-click-digital-marketing.html - pending publish (Digital Advertising is broader umbrella) https://digitalorbis.blogspot.com/2023/01/social-media-marketing-digital-marketing.html https://digitalorbis.blogspot.com/2023/02/email-marketing-digital-marketing.html https://digitalorbis.blogspot.com/2022/12/affiliate-marketing-digital-marketing.html Digital Analytics Video Marketing Digital Marketing applications for 2023 Customer engagemen...

The Digital Orbis

Search This Blog