MARKETING
LTV
Lifetime Value, the total gross profit a customer generates across all their orders, before subtracting acquisition cost.
The honest version is LTV at a specific time horizon: 12-month LTV, 24-month LTV. A business with a £40 first-order AOV and a strong repeat curve might have a 12-month LTV of £120, that changes what you can afford to spend on acquisition.
Don't confuse LTV with lifetime revenue. LTV uses gross profit (revenue minus COGS), not gross revenue. A £100-revenue customer with 20% margin contributes £20 to LTV, not £100.
LTV-to-CAC ratio is the headline number most growth teams report. 3:1 is the lazy benchmark; the real answer is industry-dependent.
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