LTV
Version 1.0.0 · Updated 2026-07-30
CORE DEFINITION
Lifetime Value, the customer lifetime value, predicts the total profit a single customer contributes to the enterprise over the entire relationship duration, often compared with CAC (Customer Acquisition Cost).
SCAFFOLDING EFFECT
Reduce cognitive load
Shift from short-term transactions to long-term value thinking. Helps enterprises judge the rationality of customer acquisition investment and guide customer segmentation and resource allocation strategies.
Anchor fast decisions
Customer lifetime value is the net present value of cash flows contributed by a customer over the relationship duration, influenced by average order value, purchase frequency, retention rate, gross margin, and discount rate. Every few percentage points increase in retention rate leads to a magnified increase in LTV (acquisition cost is spread over a longer period), so improving retention has a compounding effect compared to simply acquiring new customers.
MINIMUM ACTION
In progress 0/4Practice this model in one real situation:
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Source support: Explicit
- en.wikipedia.orghttps://en.wikipedia.org/wiki/LTVverified
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