Lifetime value
Fast track (Summarised definition)
Total revenue expected from customer relationships over entire engagement duration, essential metric for marketing investment decisions, customer acquisition strategies, and long-term business planning and profitability assessment.
Full lap (Full definition)
Lifetime value, commonly abbreviated as LTV, represents the total revenue expected from customer relationships over entire engagement duration, serving as essential metric for marketing investment decisions, customer acquisition strategies, and long-term business planning and profitability assessment.
The importance of LTV extends beyond revenue prediction to encompass strategic planning, marketing investment guidance, and customer relationship prioritisation. Understanding LTV enables businesses to make informed decisions about customer acquisition costs whilst optimising retention strategies and resource allocation for maximum profitability.
LTV calculation involves average purchase value, purchase frequency, customer lifespan, and profit margins to project total customer value over relationship duration, providing strategic insights for marketing investment and customer relationship management across diverse business models and customer segments.
LTV applications encompass marketing budget allocation, customer segmentation, retention strategy development, and business planning that require long-term value assessment whilst supporting strategic decision-making and resource optimisation across customer relationship management initiatives.
LTV benefits include improved marketing ROI, enhanced customer strategy, better resource allocation, and strategic planning support that enable sustainable business growth whilst providing clear metrics for customer acquisition and retention investment decisions.
LTV optimisation involves customer experience improvement, retention program development, upselling strategies, and relationship enhancement that increase customer value whilst extending relationship duration and improving overall business profitability through strategic customer management.
For businesses developing sustainable growth strategies and customer relationship management, LTV measurement and optimisation proves essential for strategic planning and marketing effectiveness. Strategic LTV management enables improved customer investment decisions, enhanced business sustainability, and competitive advantage through value-focused customer relationship development that maximises profitability whilst building lasting customer connections.