Calculate customer lifetime value

Customer lifetime value (LTV) is the total profit a customer brings over the whole relationship — not just one sale. It changes everything about how much you'll invest to win and keep them.

Do this

1. Estimate average purchase value and how often they buy.
2. Multiply by how many years they typically stay.
3. That's your LTV — compare it to your CAC.
4. Use it to justify spending more on acquisition and retention.

Lifetime Value Formula

LTV = Average Sale × Purchases per Year × Years as Customer

Example: Average job: $300 Times per year: 4 Stays: 3 years LTV = 300 × 4 × 3 = $3,600

Now CAC makes sense: spending $100-$300 to win a $3,600 customer is a great deal. LTV is the number that gives you permission to invest in growth.