What is customer lifetime value?

Customer lifetime value (LTV or CLV) is the total profit a customer generates over their whole relationship with you. The standard SaaS approximation is average revenue per account times gross margin divided by churn rate — a customer paying $100/month at 3% monthly churn is worth roughly $3,300 in revenue terms. Paired with customer acquisition cost, it defines how much you can afford to spend to win a customer.

Because churn sits in the denominator, LTV is mostly a retention story: halving churn doubles lifetime value, which no acquisition tactic can match. That makes LTV a lens on competitors too — a rival with sticky accounts can outbid you for every lead, so review complaints and switching signals around their retention are strategically interesting reading.