Metrics
Customer lifetime value (LTV)
Customer lifetime value (LTV) is the total revenue a business expects to earn from a customer over the entire relationship, before or after costs depending on the definition.
LTV sets the ceiling on what a business can profitably pay to acquire a customer, including affiliate and referral commissions. For subscription businesses, it is driven largely by average subscription length and expansion revenue.
Because recurring-commission programs pay out over the customer's lifetime, aligning commission structures with LTV keeps a program profitable as it scales.
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