The total revenue a customer generates over their entire relationship with your brand. High LTV lets you afford higher CAC because you're not just making money on the first purchase. Brands with strong repeat purchases can play a different game than one-and-done businesses.
LTV calculation approaches:
- Historic: Average revenue per customer over 12/24/36 months
- Predictive: Model future revenue based on purchase behavior
- Cohort-based: Track specific customer groups over time