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The amount of money a person spends with you during the period they are an active customer. For instance, if the average customer spends $100 a month and stays with you three years, then the LTV is $3,600. Many marketers make the error of basing their customer acquisition cost on the price of the first purchase, so if the initial order is $100, they only want to spend $20 or $30 on marketing to get that customer. Smarter marketers base their customer acquisition cost on LTV. So if the LTV is $3,600, then they can afford to spend hundreds of dollars to acquire a new customer. Knowing LTV, therefore gives you a huge advantage because you can afford to spend more on customer acquisition than your competitors.

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1000+ essential modern marketing concepts - combination of traditional offline marketing (branding, pricing, the 4Ps, etc)  and digital marketing concepts (web, social media, search, etc)

Related Topic: Digital Marketing


1. The amount of money a person spends with you during the period they are an active customer. For instance, if the average customer spends $100 a month and stays with you three years, then the LTV is $3,600. Many marketers make the error of basing their customer acquisition cost on the price of the first purchase, so if the initial order is $100, they only want to spend $20 or $30 on marketing to get that customer. Smarter marketers base their customer acquisition cost on LTV. So if the LTV is $3,600, then they can afford to spend hundreds of dollars to acquire a new customer. Knowing LTV, therefore gives you a huge advantage because you can afford to spend more on customer acquisition than your competitors.





 
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