What is Customer Lifetime Value (CLTV or LTV)?
This metric predicts the total net profit a company can expect to make from a single customer over the entire course of their relationship. It helps you understand how much a customer is worth to your business in the long run. While LTV (Lifetime Value) and CLTV (Customer Lifetime Value) are often used interchangeably, some people make a subtle distinction.
LTV can sometimes refer to the value of any asset over its life, while CLTV specifically refers to customers. In the world of partnerships and SaaS, they almost always mean the same thing. Knowing your CLTV is crucial because it tells you how much you can afford to spend to acquire a new customer (your CAC).