LTV: Customer Lifetime Value
The total revenue a business expects to earn from a customer over the entire relationship.
Formula
Why it matters
LTV determines how much you can afford to spend to acquire each customer. A higher LTV means you can sustain a higher CAC and still be profitable — giving you more room to outbid competitors.
How to improve LTV
Increase retention (reduce churn), increase average order value or expansion revenue, and improve onboarding to accelerate time-to-value.
LTV should be at minimum 3× CAC. For SaaS, target LTV:CAC of 3:1 to 5:1.
Prooflytics tracks LTV automatically from your connected sources and flags it in your daily briefing when it moves significantly.
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Calculate LTV from ARPU and churn rate
LTV
LTV = ARPU ÷ Monthly Churn Rate
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Frequently asked questions
What is the difference between LTV and CLV?
They are the same metric. CLV (Customer Lifetime Value) and LTV (Lifetime Value) are used interchangeably. Some companies use CLTV (Customer Lifetime Value) as the full acronym.
How does LTV affect ad spend decisions?
LTV sets your maximum sustainable CPA. If LTV is $600 and your target payback period is 12 months, your maximum CPA is $200 (assuming 33% margin). Higher LTV means more budget flexibility to outbid competitors.