LTV

Definition

Lifetime Value—the total revenue a customer generates before churning, which you compare against acquisition cost to pretend your business makes sense. Usually wildly optimistic because it assumes customers stick around forever.

Example Usage

Our LTV is $2,000 based on a 5-year retention assumption—never mind that we've only existed for 18 months and retention is tanking.

Origin

Marketing and customer analytics terminology, standardized in SaaS industry during 2000s

Fun Fact

Most startups calculate LTV by dividing revenue by churn rate, which mathematically assumes customers live forever if churn is low enough.

Source: SaaS metrics and marketing analytics standards

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