Customer lifetime value (LTV)
The value a customer brings over the whole relationship, usually counted as the gross margin from all their purchases or payments.
What it is
LTV turns a stream of future purchases into one number per customer. It can be counted on revenue, but margin is the version that says what a customer is worth.
Why it matters
For lead generation and e-commerceIt sets the ceiling on what a company can pay to win a customer. Teams with a reliable LTV can bid with more confidence; teams without one tend to value a customer by a single sale.
How it is measured
LTV = margin per purchase x purchases per year x years as a customerA simple version multiplies average margin per purchase by purchases per year and by expected years as a customer. Mature teams read it by cohort, from real repeat data.
A common mistake
Counting revenue instead of margin, or projecting lifetimes the business has never observed. Both make acquisition look more affordable than it is.