Glossary/Metrics

    LTV (Customer Lifetime Value)

    Total gross profit a customer is expected to generate over their lifetime with you.

    Definition

    LTV is the total gross profit you expect from an average customer across their full relationship with your company.

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    Month to month. Scoped on a 20 minute call.

    Why it matters

    LTV to CAC ratio is the core unit economic of an outbound motion. Most healthy B2B businesses run LTV to CAC above 3.

    How it works

    • Average revenue per customer per month
    • Multiply by gross margin
    • Multiply by expected months of retention

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    Related terms

    CAC (Customer Acquisition Cost)Sales Funnel
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