Lifetime Value / Marketing Terms Lifetime Value Lifetime value (LTV), also known as customer lifetime value (CLV), is the estimated total revenue an organisation can expect to earn from a customer over the entire duration of their relationship. This metric helps businesses and nonprofits understand the long-term value of each customer or donor, making it easier to plan budgets, evaluate marketing strategies and invest in retention. To calculate lifetime value, multiply the average transaction value by the number of transactions per year and the average customer lifespan in years. For example, if a customer spends $100 per month and stays active for three years, the lifetime value is $3,600. Many businesses also factor in profit margins, churn rates or segmentation to refine their calculations. In subscription-based models, lifetime value is closely linked to metrics such as monthly recurring revenue and average customer tenure. Knowing the lifetime value of your audience supports better strategic decisions. If your customer acquisition cost is significantly lower than your LTV, your business model is likely sustainable. If not, you may need to adjust pricing, improve retention or reduce acquisition expenses. For B2B and SaaS companies, LTV helps shape account-based strategies and onboarding processes. For nonprofits, donor LTV provides insight into long-term giving potential and helps prioritise stewardship. By focusing on increasing lifetime value, organisations can grow revenue without constantly relying on new acquisition.