What is customer lifetime value (clv/ltv)?
The total revenue you can expect from a single customer over their entire relationship with your business. Helps determine how much you can afford to spend on acquisition.
Formula
Simple LTV = Average Revenue Per User × Customer Lifespan Better: LTV = (ARPU × Gross Margin) / Churn Rate
Why it matters
LTV tells you what a customer is worth, which determines sustainable CAC. If LTV is 3x CAC, you have a healthy business. If LTV < CAC, you're losing money on every customer.
How to improve
Increase ARPU through upsells and pricing optimization. Improve retention to extend customer lifespan. Reduce churn. Bundle more value. Create expansion revenue opportunities.
Related playbooks
Make them feel the limit first
Don't ask users to pay before they've gotten value. Wait until they hit a limit that hurts, then offer the upgrade.
Bundle more value into the subscription
Add things to your subscription so canceling means losing multiple things they use.
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