Glossary Term
Customer Lifetime Value (LTV)
The total revenue, or better the gross profit, a customer is expected to bring over the whole time they stay. Set against what it cost to win them, it shows whether growth is healthy or just expensive.
Example: A subscription costs $30 a month at a 70% gross margin, and the average customer stays 20 months. That is about $420 of gross profit per customer. If winning one costs $300 in ads and sales time, the business keeps only $120, and a small rise in churn wipes it out.
How churn rate shortens customer lifetime
Share it