Growth
Customer lifetime value (LTV)
By Rubén García · 3 min
What a customer brings in over their whole relationship with your business, not just the first purchase.
Put simply, multiply their average spend per purchase by how many times they buy a year and how many years they stay.
Example: a customer spends €30 per purchase, buys 4 times a year and stays 3 years. Their lifetime value is €360.
It tells you how much you can spend to win a customer. If they cost more than they bring in, you lose money even while selling.
Referred customers tend to be worth more: a Journal of Marketing study (2011) put it at least 16% higher.
Watch out: use profit, not just sales. A customer who buys a lot with big discounts may leave you little.
