LTV
読み方：L-T-V
Lifetime Value (or Customer Lifetime Value / CLV). The total revenue a business expects to earn from a single customer over the entire duration of their relationship. LTV is the denominator against which acquisition cost (CPA) is measured. Higher LTV allows higher sustainable acquisition investment.
What is LTV
LTV (Lifetime Value) answers: "How much is a customer worth over the entire time they do business with us?" It's the foundation for deciding how much you can afford to spend acquiring new customers.
LTV Formula
LTV = Average Purchase Value × Purchase Frequency × Customer Lifespan
Example: A customer pays $100/month and stays for 24 months on average
LTV = $100 × 12 × 2 = $2,400
LTV and CPA
The relationship between LTV and CPA determines business viability:
- • If LTV = $2,400 and gross margin = 50%, gross profit per customer = $1,200
- • If CPA = $300, payback period is ~6 months—a strong business
- • If CPA = $1,500, the math barely works
Increasing LTV
- • Reduce churn: Every month of extended retention adds to LTV
- • Upsell and cross-sell: Increase average revenue per account
- • Improve product engagement: More engaged customers churn less
SaaS LTV Importance
In subscription businesses, LTV is especially critical because acquisition cost is front-loaded while revenue accrues over time. Businesses that optimize LTV often outperform those focused only on acquisition volume.