LTV / CLV (Customer Lifetime Value)

The total revenue or profit a customer generates over their entire relationship with the company.

LTV estimates how much a customer is worth over their lifetime, factoring in average revenue, margin and retention. Compared against CAC (the LTV:CAC ratio), it shows whether a business model is healthy — investors typically look for a ratio of 3:1 or higher.

Examples

A customer paying £50/month for 24 months has a £1,200 LTV. — A 4:1 LTV:CAC ratio reassures investors about scalability.

How it relates to The Startup Foundry

A strong LTV:CAC ratio is exactly the kind of evidence the Investability Report rewards under Scalability.

Related terms

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