What is Customer Lifetime Value (CLV or LTV)?

Customer lifetime value definition: the total revenue you can expect from a single user over their entire relationship with your app.

If you’re asking what is customer lifetime value in the app industry, it’s the long-term revenue per user across purchases, subscriptions, and ads.

How it works

LTV is usually modeled as ARPU × average user lifetime (months). In subscription or steady-usage apps, a common variant is LTV = ARPU ÷ churn rate (optionally multiplied by gross margin).

The point isn’t picking a “perfect” formula — it’s picking one you’ll use consistently to compare cohorts, geos, and acquisition channels over time.

Why it’s important

A healthy LTV keeps your unit economics sane. The long-standing benchmark is LTV:CAC ≈ 3:1 — you want a user’s lifetime value to be roughly triple what it cost to acquire them; below ~2:1 usually means you’re overspending, while sky-high ratios can signal under-investment in growth. forentrepreneurs.com+1
Retention is the hidden throttle on LTV. A classic Harvard Business Review analysis found that raising retention by just 5% can lift profits by 25%–95%, because longer relationships compound purchase frequency and reduce service cost. That same math plays out in mobile: keep users engaged a little longer, and LTV bends upward fast. Harvard Business Review

What is a good customer lifetime value?

There’s no universal number — what is a good customer lifetime value depends on your category, pricing model, and CAC. For many consumer subscription apps, teams anchor on LTV:CAC ≥ 3 with payback within 6–12 months; games or ad-supported models may target lower payback, while B2B/mobile SaaS often push higher LTVs thanks to stickier use cases. The goal: LTV that comfortably clears CAC and funds future growth. forentrepreneurs.com

Example

A language-learning app sees ARPU flat at $4/mo and monthly churn at 12% (implied lifetime ≈ 8.3 months). Baseline LTV ≈ $33. After shipping spaced-repetition streaks and clearer renewal terms, churn falls to 8% (lifetime ≈ 12.5 months) and ARPU nudges to $4.50 via an annual plan. New LTV ≈ $56 — a ~70% lift without changing top-of-funnel volume. In AppFollow, the team validates the shift by tracking review sentiment around “pricing,” “renewal,” and “value,” and matching the rating climb to billing data by cohort.