Glossary · Growth

Customer Lifetime Value (LTV)

LTV estimates the total value a customer delivers before they churn, driven by average revenue, margin, and how long they stay. Compared against CAC, the LTV:CAC ratio is a core measure of a business's health — 3:1 is a common benchmark. Because retention extends lifetime, small retention gains can move LTV a lot.

Related terms

Customer Acquisition Cost (CAC)

The total sales and marketing cost to acquire one new paying customer.

Retention

The rate at which users keep coming back and continue to get value over time.

Churn

The rate at which customers stop using or paying for a product.

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