Glossary
Customer Lifetime Value (LTV)
The total money a customer brings in over the whole time they buy from you, not just from their first purchase.
Customer lifetime value, or LTV, is the total money a customer brings in over the whole time they keep buying from you, not just from their first order. A rough version multiplies what a customer spends per order by how many orders they place before they stop.
Average order value x Orders per customer = LTV
$40 per order x 5 orders = $200 LTV
LTV is one of the most important numbers in any real business, because it changes what you can afford. If a customer is worth $200 over time, you can comfortably spend more to acquire one than a business whose customers only ever spend $40 once. That is the entire logic behind why some companies happily pay a lot for a first sale that barely breaks even.
This is also why an email list is treated as an asset. A subscriber you can reach again and again has a far higher lifetime value than a one-time visitor, because you get repeated chances to be useful and to make relevant offers.
Two cautions. LTV is an estimate, not a fact, so treat early numbers as rough. And it only tells you something useful when you set it against your customer acquisition cost. To go deeper, read revenue per subscriber explained and why an email list is an asset.