Lifetime customer value (LTV) is a marketing metric that represents the total value that a customer is expected to generate for a business over the course of their relationship with the company. It is typically calculated by multiplying the average purchase value by the number of purchases per year, and then multiplying that number by the average customer lifespan.
LTV is an important metric for marketers because it helps them understand the long-term value of their customer base and identify opportunities to increase customer loyalty and retention. By knowing the LTV of their customers, marketers can allocate their resources more effectively and prioritize customer acquisition and retention efforts that will have the biggest impact on the overall profitability of the business. LTV can also be used to compare the value of different customer segments or channels, and to set goals and targets for future marketing efforts.