Commercial
Lifetime Value (LTV)
Also known as: LTV, customer lifetime value, CLV, CLTV
The net present value of all future profit a single customer generates over the relationship — profit, not revenue. Paired with CAC, it tells a buyer whether the business's growth engine creates value or destroys it.
WHY IT MATTERS
Why it matters. LTV is the other half of the growth equation. A buyer who knows both CAC and LTV can model the return on every dollar invested in customer acquisition. A buyer who has neither is underwriting a business that grows by accident. During commercial diligence, the absence of LTV data means the buyer cannot distinguish between high-value customers worth pursuing and low-value customers that consume resources without producing margin. The result is a lower growth assumption in the forward model — and a lower price.