LTV · Customer lifetime value
What a customer brings you over the whole relationship, not just on their first purchase.
Technical meaning
It is calculated in margin, not revenue: average margin per order multiplied by the average number of orders per customer over a period, often twelve months, measured on your own customers. Compared with acquisition cost, it tells you how much you can spend to win a customer without losing money. Contrast calculates it on the real customer base before raising an acquisition ceiling.
Formula
LTV = average margin per order × average number of orders per customer over the period