Lifetime Value (LTV)
Lifetime Value, or LTV, measures how much revenue a customer generates across their entire relationship with you.
Multiply average customer value by average lifespan. That is LTV: what a customer is worth over the whole relationship. It matters because it sets the ceiling on what you can spend to acquire a customer. A CAC that looks scary against one purchase can be a bargain against three years of loyalty.
Signal Type
Metric Role
Metric Type
The Formula
Worked example
Benchmarks and interpretation
Where the number actually comes from
When to use it
Common Mistakes
In the REACT framework
LTV sits in the Talk phase and is the reason it exists. It turns the question from what a customer costs into what a customer is worth, and that number decides how much you can afford to spend winning the next one.
Related metrics
Frequently Asked Questions
What is Lifetime Value?
Lifetime Value, or LTV, measures how much revenue a customer generates across their entire relationship with you. It sets what a customer is worth, which resets what you can afford to spend.
How do you calculate Lifetime Value?
Use the formula: LTV = Customer Value × Customer Lifespan. Keep both inputs in the same reporting period and avoid mixing users, sessions, events, or customers unless the formula calls for it.
What data do you need for LTV?
You need customer value and customer lifespan, pulled from the relevant connected sources and computed for the same period.
What mistakes should you avoid with LTV?
Do not build plans on optimistic lifespan assumptions, and revisit the inputs as behaviour shifts. An LTV computed once and worshipped forever is a forecast wearing a metric's clothes.
When should marketers use LTV?
Use LTV when setting acquisition budgets and CAC ceilings. It turns the question from what a customer costs into what a customer is worth, which is the version worth deciding on.
What is a good LTV?
Good LTV covers CAC several times over, the common shorthand being 3:1. Direction matters as much as level: rising LTV means retention and repeat behaviour are doing their job.
Sources and methodology. LTV formula and definition derive from standard marketing analytics practice and platform reporting conventions. REACTIQ360 harmonises source data from CRM / billing / ecommerce, Customer lifecycle systems, Harmonisation layer and applies a consistent same-period computation methodology.
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