Customer Lifetime Value (LTV)

Total revenue expected from a customer over their entire relationship with the marketplace

LTV = Average Order Value × Purchase Frequency × Average Customer Lifespan

Customer Lifetime Value (LTV) estimates the total worth of a customer to the business over the entire period of their engagement. It helps in understanding the long-term value of customer relationships.

Comparing LTV with CAC can assess the profitability of acquiring new customers. A higher LTV indicates more revenue per customer, guiding investment in customer retention.

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