Metrics
LTV (Customer Lifetime Value)
The total profit a typical customer generates over their whole relationship with you.
Definition
LTV (sometimes CLV) estimates the total gross profit you earn from a customer across every purchase they'll ever make. The higher your LTV, the more you can afford to spend acquiring customers.
Formula
LTV = Avg order value × Purchases per year × Lifespan (years) × Gross margin
Example
A customer who spends AED 450 per order, three times a year, for two years, at a 50% margin, is worth AED 1,350 in lifetime value.