Calculate your customer LTV and see how it compares to industry benchmarks. Free tool, instant results.
How much does a typical customer spend per transaction?
How many times does a customer buy from you per year?
How long does a typical customer stay with you?
Your profit margin after cost of goods sold
How much do you spend to acquire one customer?
Customer lifetime value (LTV or CLV) is the total revenue you can expect from a single customer over the entire time they do business with you.
Here's the simple formula:
So if a customer spends $50 per order, orders 4 times a year, and stays with you for 3 years:
That $600 tells you how much you can afford to spend acquiring that customer and still make money.
Most businesses obsess over getting new customers. They should obsess over keeping existing ones.
Here's why: acquiring a new customer costs 5-25x more than retaining an existing one. And increasing retention by just 5% can boost profits by 25-95%. Those aren't typos.
When you know your LTV, you can answer questions like:
If your LTV is lower than your CAC (cost to acquire a customer), you're losing money on every sale. That's not a business model. That's a countdown.
LTV alone doesn't tell the whole story. You need to compare it to what you spend to get that customer.
The benchmarks:
Most VCs want to see at least 3:1 before they'll invest. It proves your unit economics actually work.
There are only three levers:
Of these three, retention usually has the biggest impact. A customer who stays 4 years instead of 2 doubles their LTV without you spending a dime on acquisition.
What kills retention? Bad product, sure. But also: slow support, ignored emails, feeling like a number instead of a customer. The businesses with the best LTV are usually the ones that respond fastest when customers reach out.