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Analytics

What is LTV (Lifetime Value)?

The total revenue a customer generates for the brand over their lifetime. A critical metric in subscription and e-commerce models.

Detailed definition

LTV = average basket × annual purchase frequency × average customer lifespan. SaaS: monthly subscription × number of months. E-commerce: one customer placing 3 orders a year × 400 TL × 2 years = 2400 TL LTV. The LTV/CAC ratio is the main signal for investment decisions: 3:1 is healthy, 5:1 and above is premium.

Examples

  • At a beauty brand, the LTV of a subscription customer is 5x higher than that of a one-off customer.

Related terms

CAC (Customer Acquisition Cost) The total cost of winning one new customer — CAC = marketing spend ÷ number of new customers. Subscription Model Automatic recurring delivery to the customer (weekly or monthly) — common in beauty, food and supplements. Performance Max (PMax) Google's AI-driven campaign type — it automates the whole inventory of Search, Display, YouTube, Shopping and Maps in a single campaign. Google Shopping Ads E-commerce ads that appear in Google search results with a product image, a price and the brand. Lead Form Ads A format in which the user fills in the form inside the ad when they click it, without going to the site.
From the same category

Other terms in the Analytics category

GA4 (Google Analytics 4) Google's next-generation analytics platform — an event-based data model that replaced GA Universal. GTM (Google Tag Manager) Google's tag management system for adding analytics and advertising tags without touching your site code. Enhanced Conversions Raising the conversion match rate by sending first-party data such as email and phone number to Google Ads in hashed form. Conversion Rate The percentage of visitors to your site who complete the desired action (a purchase, a form submission). Attribution Model The model that shares out a sale or conversion across the channels and touchpoints behind it.
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