6h • General discussion
Business 101: LIfe Time Value (LTV)
LTV. Lifetime Customer Value.
Most new business owners think about the first sale. Smart business owners think about the total value of a customer over the entire time they do business with you.
Here is a simple example.
A customer pays you $100 a month for your service. They stay with you for 24 months. Their LTV is $2,400.
Now here is why this matters.
If you know your average customer is worth $2,400 over their lifetime you can afford to spend significantly more than $100 to acquire them.
A business that only thinks about the first transaction will always underspend on marketing and growth.
A business that thinks in LTV makes completely different and usually better decisions about where to put its money.
Three numbers every business owner should know cold.
Average transaction value.
How many times a customer buys per year.
How many years they stay.
Multiply those three numbers together and you have your LTV.
Once you know your LTV everything changes. Your marketing budget makes more sense. Your pricing strategy gets clearer. Your retention efforts become a priority instead of an afterthought.
Revenue is not just about getting new customers. It is about knowing exactly how much each customer is worth and building a business that maximizes that number.
Drop your LTV in the comments if you know it. If you do not know it yet that is your homework for today.
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Business 101: LIfe Time Value (LTV)
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