Customer Lifetime Value (LTV) is a metric that represents the revenue you get from a client during the time that they remain a customer to your business.

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To evaluate LTV, it is crucial to analyze other important indicators, like Churn Rate and frequency of purchases.

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The basic formula used to calculate LTV is:

This metric is important because it represents how valuable the customer is to your business. The ability to know how much money they spend on average with your products or services and for how long will help to:

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• Develop more effective marketing and sales strategies;
• Know how much to invest on advertising and acquisition; and
• Know how much revenue you can expect in the future;

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