GTM Glossary · Metrics
Customer Lifetime Value (LTV)
The total gross profit a customer is expected to generate over the whole relationship.
[01]What It Means
Usually average gross profit per period divided by churn rate, adjusted for expansion revenue. LTV is a projection, so its credibility depends entirely on whether the churn and expansion assumptions come from data or from optimism.
[02]Why It Matters
It sets the ceiling on what you can rationally spend to acquire a customer, and it is the number that justifies senior, multi-touch selling in markets where cheap volume outreach does not work.
[03]Where It Goes Wrong
Modelling LTV on a handful of early customers who are not representative.Using revenue rather than gross profit, which overstates value in service-heavy models.Assuming European retention will mirror the home market before a single renewal has happened.
[04]Related Terms