Lifetime Value (LTV)
In practice, LTV and Customer Lifetime Value are often used interchangeably, although some teams use LTV for users and CLV for customer accounts. The calculation may be historical or predictive and should specify whether it uses revenue, gross margin, discounting, and a fixed or expected lifetime. LTV is useful for acquisition economics, segmentation, pricing, and retention investment.
What is Lifetime Value (LTV)?
Lifetime Value (LTV) estimates the revenue or profit expected from a user or customer over the duration of the relationship.
Why it matters
In practice, LTV and Customer Lifetime Value are often used interchangeably, although some teams use LTV for users and CLV for customer accounts. The calculation may be historical or predictive and should specify whether it uses revenue, gross margin, discounting, and a fixed or expected lifetime. LTV is useful for acquisition economics, segmentation, pricing, and retention investment.
Example
A mobile game estimates LTV by combining expected purchase revenue, advertising revenue, retention, and platform fees for each acquisition cohort.