LTV (customer lifetime value)
LTV is the total value a customer generates over their relationship with the business — honestly computed as contribution margin per cohort over time, not revenue.
LTV computed on revenue is a fiction that flatters: only margin can justify an acquisition cost. The two disciplines that keep it honest are using realized cohort curves (what past cohorts actually produced at 6 and 12 months) rather than projections, and segmenting — LTV by first product purchased and by acquisition channel routinely varies two-to-three-fold.
For subscription businesses the standard approximation is monthly margin divided by monthly churn rate, which assumes constant churn and therefore overstates LTV when cancellations concentrate in early months.
Want to know what yours is?
The free audit reads your actual account and computes the numbers behind every one of these definitions — no generic benchmarks.
Run the free audit