What Is LTV?
Also known as: Customer Lifetime Value · القيمة الدائمة للعميل
LTV (Customer Lifetime Value) is the total revenue a business expects to earn from a single customer over the entire duration of their relationship with the brand.
LTV explained
LTV is used to determine how much a brand can reasonably spend to acquire a customer through influencer or performance marketing while remaining profitable in the long run, rather than judging campaigns solely on first-purchase economics.
Subscription businesses, fintech apps, and retail brands in the GCC increasingly use LTV to justify higher CPA targets for influencer campaigns, since a customer who repeatedly purchases or renews is worth significantly more than their first transaction alone.
LTV is typically compared against customer acquisition cost (CAC) using an LTV:CAC ratio; a commonly cited healthy benchmark is 3:1 or higher, meaning a customer generates at least three times what it cost to acquire them.
How to calculate LTV
LTV = Average Order Value × Purchase Frequency × Average Customer LifespanKey facts
- LTV estimates total revenue from a customer across their full relationship with the brand.
- Used to justify sustainable CPA and influencer marketing spend levels.
- A healthy LTV:CAC ratio is commonly cited as 3:1 or higher.
- Subscription and repeat-purchase businesses rely heavily on LTV for budgeting.
Example
A Saudi subscription meal-kit brand has an average order value of SAR 200, customers order twice a month, and stay subscribed for 10 months on average. LTV = 200 × 2 × 10 = SAR 4,000.
LTV benchmarks in MENA
| Segment | Typical range | Notes |
|---|---|---|
| Healthy LTV:CAC ratio | 3:1 or higher | Widely cited threshold for sustainable acquisition spend. |
| Subscription apps (MENA) | $40–$150 | Varies by category, churn rate, and price point. |
| E-commerce repeat customers (GCC) | $100–$500 | Depends on purchase frequency and average order value. |
Frequently asked questions about LTV
Why is LTV important when evaluating influencer marketing spend?
LTV shows the true long-term value of a customer, allowing brands to justify a higher acceptable CPA than if they only considered the first purchase. Without LTV context, brands may underinvest in influencer campaigns that drive high-quality, repeat customers.
What is a good LTV:CAC ratio?
A ratio of 3:1 or higher is commonly considered healthy, meaning a customer generates at least three times the cost it took to acquire them. A ratio below 1:1 indicates the business is losing money on each customer acquired.
How is LTV calculated for a subscription business?
LTV is typically calculated by multiplying average order value by purchase frequency and average customer lifespan or retention period. For subscription models, this is often simplified to average monthly revenue per user divided by the monthly churn rate.
Related services & tools
Related terms
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Valors Media plans, runs and reports influencer and affiliate campaigns across Saudi Arabia, the UAE, Egypt and the wider GCC.