What does LTV measure?

LTV is the predicted revenue that one customer will generate throughout their relationship with a company.

LTV is a quick indicator of a customer's value relative to how much it costs to earn them.

LTV is a marketing metric that measures the percentage of website visitors or users who complete a desired action, such as making a purchase.

LTV is a metric that refers to the amount of money an advertiser pays for each click on their advertisement.


Choose an option to see if it’s correct. Check the explanation below.

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Explanation: What does LTV measure?


Explanation: The correct answer is **LTV is the predicted revenue that one customer will generate throughout their relationship with a company**. LTV, or Customer Lifetime Value, is a crucial metric in marketing and business strategy that estimates the total revenue a single customer is expected to generate over their entire relationship with a company. It takes into account various factors such as average purchase value, purchase frequency, customer retention rate, and the average length of the customer relationship. By understanding LTV, businesses can make informed decisions regarding customer acquisition costs, marketing strategies, and resource allocation. It helps companies prioritize high-value customers, optimize marketing campaigns to attract and retain them, and ultimately maximize profitability. Therefore, LTV is a fundamental metric for assessing the long-term financial impact of acquiring and retaining customers, making it a key performance indicator for businesses aiming for sustainable growth and profitability.
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