Lifetime Value (LTV) is a metric used to estimate the total monetary value that a customer will generate over the entire duration of their relationship with a business. It is a prediction of the revenue a business can expect to earn from a single customer over the course of their relationship.
To calculate the lifetime value of a customer, businesses typically take into account the amount of money a customer spends on products or services, how frequently they make purchases, the length of the customer's relationship with the business, and the costs associated with acquiring and retaining that customer.
The lifetime value of a customer is an important metric for businesses as it can help them determine how much they should invest in acquiring and retaining customers, as well as how much they can afford to spend on marketing and sales efforts. A high lifetime value indicates that a customer is likely to generate significant revenue for the business over time, making it more cost-effective to invest in acquiring and retaining that customer.
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