LTV

Life Time Value (LTV) – It is the total value of a customer and an important KPI for subscription services (SaaS), but also e-merchants. Instead of using only one transaction in the calculations for ROI or ROAS, you calculate the sum of the transactions that the customer completes, usually by calculating the average of the subscription length or number of purchases and then set it against CAC. For subscriptions, churn then becomes extremely central. If LTV is larger than CAC, you have generally seen a working business model.

This is an entry in the Growth Hackers glossary, where you will find our definitions of terms that may be good to know.