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    What is customer lifetime value (LTV)?

    Reviewed by Taylor Moses, Co-Founder, Strategy & Web·

    Direct Answer

    Customer lifetime value (LTV) is the total revenue a single customer generates across the entire relationship. For service businesses, calculate as average ticket × repeat purchases per year × years retained. LTV sets the ceiling on what you can spend to acquire a customer (CAC) — most healthy businesses run LTV:CAC of 3:1 or better.

    Voice answer (≤30 words)

    “Customer lifetime value is the total revenue from one customer across the relationship. Healthy businesses run LTV to CAC of three to one.”

    LTV is meaningless without churn. Calculate retention curves per cohort, not company-wide averages.

    Maintenance contracts and subscriptions multiply LTV by 2–5x for trades businesses.

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