What best describes LTV?

• A. The average revenue generated per customer over a certain period
• B. The total number of customers
• C. The churn rate of customers
• D. The cost to acquire a customer

Answer: (A)

LTV is about how much revenue a single customer is expected to bring in over the time they stay with your business. It’s a value-focused metric that guides how much you should invest in acquiring and retaining customers. The option that describes revenue per customer across a period best fits this idea, because it emphasizes the money a customer contributes over the span of their relationship rather than just counting people, tracking who leaves, or measuring acquisition cost. The other metrics point to quantity (total customers), churn behavior, or cost to acquire, which are different aspects of the business analytics landscape. In practice, you can think of LTV as the total revenue (or profit) a customer generates over their relationship, often estimated as average revenue per user over the expected lifespan, adjusted for margins.