Lifetime Value (LTV)

LTV is calculated by combining average contract value, gross margin, and expected customer lifespan. A simplified formula is: LTV = Average Annual Revenue Per Account × Gross Margin % × Average Customer Lifespan in Years. More sophisticated models incorporate expansion revenue (upsells and cross-sells), contraction (downgrades), and the time value of money through net present value calculations. For subscription businesses, average customer lifespan is the inverse of the annual churn rate — a 10% annual churn implies an average lifespan of 10 years. LTV is most valuable not as an absolute number but as a ratio with CAC (customer acquisition cost). The LTV:CAC ratio tells you whether each customer generates enough lifetime revenue to justify the cost of acquiring them, and by how much. It also directly informs how much you can afford to spend on acquisition channels: a product with $100K LTV can afford $33K CAC at a 3:1 ratio, unlocking sales strategies (like enterprise outbound, in-person events, or dedicated account-based selling programs) that would be economically irrational for a product with $1,000 LTV. For outbound-heavy businesses, expanding LTV through retention, upsell, and expansion is the complement to reducing CAC through prospecting efficiency. Outvid is most commonly used on the acquisition side — generating new customer pipeline through personalized video outreach — but the same technology can support LTV expansion by enabling customer success teams to send personalized video to customers approaching renewal or with expansion opportunity, maintaining the human relationship quality that drives retention and upsell.