Lifetime Value (LTV) Ratio

The Lifetime Value (LTV) Ratio is a metric that compares the total value a customer is expected to bring to a business over their lifetime to the cost of acquiring that customer (Customer Acquisition Cost, or CAC). The LTV Ratio is a crucial indicator of the efficiency of a company's sales and marketing strategies, as it assesses whether the investment in customer acquisition is justified by the long-term value those customers provide.

A higher LTV Ratio suggests that a business is retaining customers effectively and generating substantial revenue from them over time. A lower ratio could indicate issues with customer retention or an unsustainable acquisition strategy. Businesses in the UAE’s fast-growing e-commerce and SaaS markets often rely on LTV metrics to drive customer retention programs and optimize marketing budgets.