---
title: "Customer Lifetime Value (CLV or LTV): Definition"
description: "Customer lifetime value (CLV or LTV) is the total revenue or gross profit a business expects from one customer over the whole relationship."
path: /glossary/customer-lifetime-value
family: glossary
updated: 2026-10-17
html: /glossary/customer-lifetime-value
sources:
  - "https://chartmogul.com/saas-metrics/ltv/"
  - "https://www.salesforce.com/blog/sales/customer-lifetime-value/"
  - "https://stripe.com/en-at/resources/more/cac-in-saas"
facts:
  term: "Customer lifetime value (CLV or LTV)"
  also_called: "LTV, CLV, CLTV, lifetime value, customer LTV"
  category: "Sales"
  formula: "LTV = average monthly revenue per customer x gross margin / monthly churn rate"
---

# Customer lifetime value (CLV or LTV)

Customer lifetime value (CLV or LTV) is the total revenue or gross profit a business expects from one customer over the whole relationship. Teams compare it with customer acquisition cost to decide how much they can spend to win customers.

## What Is Customer Lifetime Value (CLV or LTV)?

**In short:** For subscription businesses the simple version is average monthly revenue per customer, times gross margin, divided by monthly churn rate.

Dividing by churn estimates how long a customer stays: at 2% monthly churn, the average customer lasts about 50 months. Revenue-based LTV skips the margin and comes out higher, so say which one you mean.

LTV is a forecast, not a fact, and it is very sensitive to churn: halving churn doubles LTV. ChartMogul points out that the simple formula assumes churn is spread evenly over a customer's life, while real cohorts lose most customers early, so it tends to overstate LTV. Young companies with little history should treat the number with extra care.

## Customer Lifetime Value Example

Formula

```text
LTV = average monthly revenue per customer x gross margin / monthly churn rate
```

Example: customers pay $400 a month on average, gross margin is 75% and monthly churn is 2.5%. LTV = $400 x 0.75 / 0.025 = $12,000. With a CAC of $3,000, the LTV:CAC ratio is 4:1.

## Customer Lifetime Value in Practice

Sales teams use LTV to set how much they can spend per customer and which segments to chase. If mid-market customers have twice the LTV of small businesses at a similar CAC, the outbound list should tilt toward mid-market. Upsells and cross-sells raise LTV, which is why net revenue retention matters as much as new logos.

## FAQ

### How do you calculate customer lifetime value?

For a subscription business, multiply average monthly revenue per customer by gross margin and divide by the monthly churn rate. $500 a month at 80% margin and 2% churn gives an LTV of $20,000.

### What is the difference between LTV and CLV?

None in practice. LTV, CLV and CLTV are different abbreviations for customer lifetime value.

### What is a good LTV?

LTV is judged against CAC. SaaS businesses generally aim for an LTV about three times CAC, so a $3,000 CAC calls for an LTV of around $9,000 or more.

### How can you increase customer lifetime value?

Reduce churn, raise prices where value supports it, and sell more to existing customers through upsells, cross-sells and expansion into other teams.

## Do this in Ken

### Do This in Ken

Grow lifetime value with expansion outreach: find other teams and offices at your current customers in Ken Search, then offer them your product through a sequence in Campaigns.

- Link: [Do This in Ken](/features)

## Related

- [GTM Glossary](/glossary): Every GTM term, grouped by topic.
- [Customer acquisition cost (CAC)](/glossary/customer-acquisition-cost)
- [Churn rate](/glossary/churn-rate)
- [Net revenue retention (NRR)](/glossary/net-revenue-retention)
- [Upselling](/glossary/upselling)
- [Cross-selling](/glossary/cross-selling)
- [ARR (annual recurring revenue)](/glossary/arr)
- [Ken features](/features)

## Sources

| Source | URL | Checked |
| --- | --- | --- |
| ChartMogul: Customer lifetime value (LTV) | https://chartmogul.com/saas-metrics/ltv/ | 2026-10-17 |
| Salesforce: What is customer lifetime value (CLV) | https://www.salesforce.com/blog/sales/customer-lifetime-value/ | 2026-10-17 |
| Stripe: CAC in SaaS (LTV:CAC benchmark) | https://stripe.com/en-at/resources/more/cac-in-saas | 2026-10-17 |

## Changelog

- 2026-10-17: Page published.