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Product Management vocabulary · Metrics & KPIs

Customer lifetime value

Meaning in product management, with examples

nounAdvanced term

In product management, customer lifetime value means: The total revenue, or profit, a business expects to earn from one customer during the whole time that customer stays with it.

In Turkish: müşteri yaşam boyu değeri, müşteri ömür boyu değeri

How it is used

Shortened to CLV or LTV. It is usually compared with customer acquisition cost (CAC); a common rule of thumb in subscription businesses is an LTV to CAC ratio of about 3 to 1. Reducing churn is one of the strongest ways to raise it.

Example sentences

  1. Annual plans have a much higher customer lifetime value than monthly ones.

  2. If we spend $200 to win a customer, their customer lifetime value needs to be well above that.

Common collocations

  • increase customer lifetime value
  • LTV to CAC ratio
  • average customer lifetime value
  • lifetime value
  • churnThe loss of customers or users who stop using or paying for a product during a period, often shown as a percentage called the churn rate.
  • retentionThe share of users or customers who keep using a product over time, for example the percentage still active 30 days after signing up.
  • pricingThe way a company decides how much to charge for a product and how to structure that charge, for example with plans, tiers, discounts and free trials.
  • cohortA group of users who share a characteristic in a given time period, most often the week or month they signed up, and who are studied together over time.
  • KPIShort for key performance indicator: one of the few numbers a team watches closely to judge whether a product or business is doing well.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Metrics & KPIs

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