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Lifetime value is the estimated revenue a customer will contribute to your business during their lifetime. There are many different ways to calculate LTV. One of the simplest ways is by subtracting the cost of acquiring and servicing a customer with the revenue contributed by the customer.
For businesses, acquiring new customers is far more expensive than retaining and nurturing existing ones. LTV can help you gauge the value your existing customers are bringing to your business and devise strategies to:
- Acquire new customers.
- Retain existing customers and increase their LTV by up-selling and cross-selling.
