Lifetime Value (LTV) is the total revenue a customer generates over their entire relationship with your company, calculated as average revenue per customer multiplied by average customer lifespan.

LTV is why CX investment matters. Support costs are visible and immediate—headcount, tools, overhead. Support value is invisible and delayed—reduced churn, increased expansion, referrals. LTV quantifies that value. Every point of churn you prevent extends lifespan and adds directly to LTV.

Simple formula: Average Revenue Per Account (ARPA) x Average Customer Lifespan. More sophisticated models factor in gross margin, expansion revenue, and time value of money. For decision-making, the LTV:CAC ratio matters most—if it costs $500 to acquire a customer with $5,000 LTV, you can afford to invest in retention.

CX teams should think in terms of LTV impact, not cost savings. A $50/hour agent spending 30 minutes to save a $5,000 LTV customer isn't expensive—it's a 400x return. Build this framing into your business cases. When justifying headcount, tools, or process improvements, connect them to churn reduction and LTV protection. That's the language the CFO speaks.

Related terms: Customer Churn Rate, Customer Health Score, Net Promoter Score (NPS)