Customer lifetime value (LTV)
also known as LTV · CLV · lifetime value
The total revenue an agency expects to earn from a client over the whole relationship. A core input for how much you can afford to spend winning clients.
For example, a client on a $3,000 retainer who stays for an average of three years is worth roughly $108,000 in lifetime value. That figure tells you how much you can sensibly invest in winning and keeping a client like them.
Why it matters to agencies: LTV reframes a client from a monthly invoice into a long-term asset, and pairs with acquisition cost to show whether growth is actually profitable. Lifting LTV - through lower churn or expansion - compounds an agency's value faster than almost anything else.
Aim for an LTV at least 3x your acquisition cost; lifting it through lower churn or expansion compounds an agency's value faster than almost anything else.
LTV = average monthly revenue per client × average client lifespan in months
Lower churn lengthens the lifespan, so it raises LTV directly.
Customer lifetime value calculator
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What is customer lifetime value (LTV)?
The total revenue an agency expects to earn from a client over the whole relationship. A core input for how much you can afford to spend winning clients.
How do you calculate customer lifetime value?
Multiply the average monthly revenue per client by how many months a client stays on average; lower churn raises both.
What is a good LTV to CAC ratio?
A common benchmark is an LTV at least three times the cost to acquire the client - below that, growth tends to lose money.
How do you increase customer lifetime value?
Reduce churn, expand accounts through upsell, and raise prices toward the value delivered - each lengthens or deepens the relationship.