What Is Lifetime Value? Definition & Guide

Lifetime value (LTV), also called customer lifetime value (CLV), is the total revenue a business can expect to generate from a single customer over the entire duration of their relationship. It accounts for average purchase value, purchase frequency, and customer lifespan to produce a single number that represents how much each customer is worth. LTV is a foundational metric for understanding how much you can afford to spend to acquire a customer and how much effort to invest in retaining them.

Why Lifetime Value Matters

LTV is the other half of the CAC equation. Knowing your customer acquisition cost in isolation is not enough -- you need to know whether what you pay to acquire customers is justified by what those customers return. The LTV:CAC ratio tells you how efficient your growth economics are. A 3:1 ratio is often cited as a healthy target; lower means you are spending too much to acquire customers relative to what they are worth.

LTV also reframes how you think about customer relationships. When you understand that a customer is worth $10,000 over their lifetime, the economics of investing in their retention -- through better content, support, and onboarding -- look very different. A $500 investment in customer success content that increases retention by even a small amount can generate significant LTV uplift at scale.

Content marketing has a direct impact on LTV. Educational content that helps customers get more value from your product increases product adoption, reduces churn, and creates advocates who refer new business. Each of these effects increases the effective lifetime value of every customer your marketing program acquires.

How It Works

Calculating LTV requires three inputs: average purchase value, average purchase frequency, and average customer lifespan. Multiply average purchase value by purchase frequency to get annual customer value. Multiply annual customer value by average customer lifespan in years to get LTV.

For subscription businesses, LTV is often approximated as average monthly recurring revenue divided by monthly churn rate -- a simple formula that captures the expected cumulative value before a customer churns.

Improving LTV involves reducing churn (keeping customers longer), increasing purchase frequency or average order value (getting customers to buy more), and expanding accounts (upselling or cross-selling). Content plays a role in all three: onboarding content reduces early churn, product education increases usage and stickiness, and cross-sell content helps existing customers discover adjacent value. Averi helps marketing teams build the customer content programs that directly improve retention and LTV metrics.

Lifetime Value Best Practices

• Calculate LTV by segment or cohort, not just as a single blended number -- high-value segments often look very different from low-value ones
• Track LTV trends over time to understand whether retention and expansion programs are working
• Invest in post-sale content -- onboarding guides, feature tutorials, and use case content all reduce churn and increase LTV
• Use LTV data to inform how much you are willing to pay to acquire customers in different segments
• Build customer expansion content that makes it easy for customers to discover additional value in your product
• Measure the LTV impact of your customer content programs to demonstrate their return on investment

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• 📋 Template: Value Proposition Canvas Template