What is LTV Ratio and Why Does It Matter for Your Business?

Learn All About LTV Ratio

If you’re running a business, it’s important to know what your LTV ratio is. But what is that, exactly? LTV stands for “lifetime value” and the ratio is simply how much you earn from each customer divided by how much it costs you to acquire them.

There are a few different ways to calculate your 90% LTV Ratio. The most common is to take your total revenue divided by your total number of customers. This will give you your average revenue per customer. Then, divide that number by the cost of acquiring a new customer. This will give you your LTV ratio.

For example, let’s say you have a business that sells products online. In one year, you make $100,000 in sales and acquire 100 new customers. That means your average revenue per customer is $1000. If it costs you $500 to acquire each new customer, then your LTV ratio would be two

90% Ltv Ratio

Another thing to keep in mind when considering your LTV ratio is customer churn. This is the percentage of customers who stop doing business with you over a certain period of time. For example, if you have a customer churn rate of 20%, that means 20% of your customers will leave each year. To account for this, you need to adjust your LTV ratio accordingly.

If you have a high LTV ratio, it means you’re getting a good return on your investment for acquiring new customers. If it’s low, it means you’re not generating enough revenue from each customer to cover the cost of acquisition. In either case, knowing your LTV ratio can help you make better decisions about how to grow your business.