// Metrics
LTV
Lifetime Value, the gross-profit-weighted expected revenue from a customer over their lifetime.
In depth
The honest formula is (ARPA × gross margin) / churn rate. LTV:CAC below 3:1 signals under-investment in growth or a broken funnel; above 5:1 usually means the company is under-spending on sales & marketing.
Related terms
CAC
Customer Acquisition Cost, fully-loaded S&M spend divided by new customers acquired in the period.
NRR
Net Revenue Retention, % of recurring revenue retained from existing customers over 12 months, including expansion, minus churn and contraction.
ARPA
Average Revenue Per Account, total recurring revenue divided by number of accounts.