Customer Lifetime Value estimates the total revenue a customer generates over their entire relationship. Learn how LTV fits into KPI tree analysis.
Customer Lifetime Value (LTV) estimates the total net revenue a business can expect from a single customer account over the duration of their relationship. The simplified formula is LTV = ARPU × Gross Margin × (1 ÷ Churn Rate). In a KPI tree, LTV helps evaluate acquisition efficiency: a high LTV-to-CAC ratio means each acquired customer generates significant long-term value.