Definition

LTV (Customer Lifetime Value)

Gross-margin contribution a customer is expected to generate over their full relationship.

LTV approximates the present-value of a customer's gross margin stream. LTV / CAC > 3x is the rough industry benchmark but is sensitive to assumptions about retention, expansion, and discount rate. Diligence focuses on whether retention rates used in the LTV calculation match observed cohort behaviour and whether expansion is being double-counted.