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It doesn’t just give you a snapshot of a customer’s purchase value today.
It predicts how much they’re likely to bring in over their entire relationship with your business.
As a senior marketing professional, keeping tabs on your LTV doesn’t just tell you how well you’re doing at retaining customers and driving repeat purchases…
It also tells you how much your business can afford to spend on acquiring new customers.
Without it, you’ll likely miss out on scaling opportunities and early detection of holes in your retention strategies.
Focusing on LTV is the fun part of your marketing job.
Putting in the effort to make sure your customers are getting the full transformation out of their purchase can double your business revenue with hardly any money out of your marketing budget.
A high LTV means you’re getting the most out of each customer. And that’s where real growth happens.
At Tier 11, we took one of our health niche clients from $30,000/month revenue to well over $2,000,000/month.
The biggest factor in their growth was a tiny remarketing campaign targeting previous customers.
Over the course of a year, their LTV doubled.
And that campaign cost less than 1% of their advertising budget.
That’s the power of LTV.
The average revenue you pull in per order. A higher AOV means more revenue per transaction, which drives up LTV.
How often customers buy from you. The more frequently they make a purchase, the higher the LTV.
How long a customer sticks around and keeps buying. The longer they stay, the more valuable they become.
Knowing your LTV means you can confidently spend more on acquiring new customers. Why? Because you know they’ll pay off in the long run.
LTV helps you figure out how much revenue you’re getting from existing customers and how much more you can squeeze out with loyalty programs and retention strategies.
LTV gives you a clear line of sight into future revenue, so you can set realistic growth targets based on what your existing customers are worth.
Monitoring LTV over time lets you see how well your marketing and retention strategies are working. Compare it across different segments, campaigns, or time periods to see where strategies worked and where there’s room for improvement.
Let’s look at a subscription business that offers fitness memberships and equipment. Here’s the breakdown:
Using the LTV formula:
So, each customer is worth $1,224 over their lifetime.
Let’s say you segment your customers and find:
Here’s where the real magic happens:
Group A’s higher LTV comes from more frequent purchases, not bigger orders.
This tells you that if you can get the other segments to buy more often, you could boost their LTV too.
This is why LTV matters.
It gives you the full picture, helps you optimize acquisition, and shows you where to push harder on retention.
With this data, you’re always making moves based on the bigger picture, not just what’s happening in the moment.
