LTV (Customer Lifetime Value) A metric so powerful, it can predict the life or death of your business.
I first came across this term for the first time when I got into the service business from product sales. While we were till used to being assigned a percentage which you could use for the various partner schemes and marketing activities per product which was basically driven by the product cost, the cost that was spend on customer acquisition would vary depending on the LTV.
Let’s break it down👇
🔍 What is LTV?
LTV = The total revenue you earn from a customer over the entire relationship.
But it’s more than a metric. It’s a strategic compass.
It helps answer 3 life-changing questions for your business:
- How much can you afford to acquire a customer? (CAC)
- How long should you retain them to break even?
- What are your most profitable segments to double down on?
If you’re not designing strategy around LTV, you’re flying blind.
📊 Real-World Examples
🛍 Amazon
In 2001, Amazon’s LTV data revealed Prime customers spent 4x more than non-Prime. What did Amazon do? 📦 Launched Prime aggressively. 🔁 Built an ecosystem around retention. → Result: Amazon now prints loyalty at scale.
🚗 Tesla
Tesla doesn’t spend on traditional marketing. Their LTV strategy? 🔥 Build high NPS through product excellence. 🔁 Monetize via software upgrades, insurance, and FSD. → The customer pays once but keeps paying for years.
💡 Spotify
Spotify focused on increasing LTV per listener through:
- Playlists (habit-forming retention)
- Family plans (higher LTV per household)
- AI discovery (personalized stickiness)
→ Revenue per user increased +42% in 3 years.
💥 So What Should YOU Do?
- Know Your LTV by Segment Not all customers are created equal. Some drain you, some scale you.
- Align Strategy with LTV Marketing, pricing, retention, product roadmap — all must orbit LTV.
- Use LTV to Outspend Competitors If your LTV is $500 and theirs is $200, you can afford to dominate the market with better spends.
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❤️ If this helped you see business differently —
💬 Drop your favorite LTV example
Let’s help more businesses think strategically, not reactively.
#Strategy #LTV #BusinessGrowth #CustomerRetention #LinkedInTopVoice #BusinessModel #RejosBusinessBytes
