WARC DC Series on Metrics & Measurement: Understanding LTV (Customer Lifetime Value)

Jo Bowman and Gregory Grudzinski

LTV stands for Lifetime Value – an essential metric for gauging brand loyalty among customers.

What’s LTV?

Customer lifetime value is a way of determining which customers spend the most money with your business over the length of their relationship with you. It’s a proxy metric for loyalty, because the customers who come back to you again and again are those most likely to generate a high LTV.

There are a few different ways of measuring LTV, borne out of necessity because not every brand has a rich seam of long-term data showing who’s buying what, when and at what price.

In general, it’s calculated by multiplying the average value of a purchase with the...

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