Which statement correctly defines LTV?

• A. The average revenue generated per customer over a certain period of time
• B. The average profit per customer over a month
• C. The total ad spend per customer
• D. The expected revenue from a new customer in the first week

Answer: (A)

LTV is about the total value a customer brings in over the duration of their relationship with the business. It looks at revenue generated from that customer across time, not just from one transaction or a short window, and it’s typically considered over the entire lifetime (or a defined horizon) of the customer. So the statement that defines LTV as the average revenue generated per customer over a certain period of time best captures this idea, since it emphasizes the cumulative revenue a customer produces rather than profit, ad spend, or short-term revenue snapshots. The other options describe profit per customer, total marketing spend per customer, or revenue in just the first week, which are different metrics and do not reflect the lifetime revenue concept.