The total profit a customer will ever hand you, minus what it cost to get them.
means Lifetime Value is the net revenue a customer generates over the entire span of your relationship, calculated by multiplying average transaction value by purchase frequency by customer lifespan, then subtracting acquisition and retention costs.
from Emerged in the 1990s from retail and telecom industries tracking repeat customer profitability; formalized in software and SaaS as the metric that actually determines whether your business model works or collapses.
saas companies — Stripe obsessively optimizes LTV by reducing churn; industry standard tracks it quarterly
fast fashion e-commerce — Shein's model depends on LTV from repeat Gen-Z customers buying cheap weekly
credit card companies — Chase calculates LTV across decades of spending, rewards, and fee generation