Digital Marketing & Analytics
Intermediate

Customer Lifetime Value

Predicted total revenue a single customer will generate over their relationship with a business.

Formula

LTV=ARPU×1Churn RateLTV = ARPU \times \frac{1}{\text{Churn Rate}}

Variables

LTVLifetime value
ARPUAverage revenue per user per period
\text{Churn Rate}Fraction of customers lost per period

Example

ARPU = $50/month, churn = 5 %/month → LTV = $1 000

Did You Know?

A healthy business typically has an LTV:CAC ratio of 3:1 or higher.

marketingltvclvcustomer value

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