LTV, or Customer Lifetime Value, is a metric that estimates the total revenue (or net profit, depending on the approach) that a customer will generate for the company throughout the entire period of their relationship. The basic calculation involves multiplying the average value of a sale by the annual recurrence of these sales and then by the average customer retention time in years. LTV is an essential forecasting metric for determining how much a startup can invest to acquire each customer (CAC – Customer Acquisition Cost). For Venture Capital funds, the LTV/CAC ratio is one of the main indicators of business unit efficiency: a healthy proportion (generally above 3x) indicates that the company generates three times more value than it spends to grow, signaling a scalable and profitable business model in the long term.
Practical Example: Imagine um software de CRM por assinatura que custa R$ 200 por mês (R$ 2.400 por ano). Em média, as empresas utilizam esse software por 3 anos antes de trocar de sistema ou encerrar as atividades. O LTV bruto desse cliente seria: R$ 200 (mensalidade) x 12 (meses) x 3 (anos) = R$ 7.200. Se a startup gasta R$ 1.500 em marketing e vendas para adquirir esse cliente, o negócio é considerado saudável, pois o retorno gerado (R$ 7.200) é quase cinco vezes superior ao custo de aquisição (R$ 1.500).
Bonus Tip! Read the book “Data-Driven Marketing”, by Mark Jeffery.
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