— Glossary
LTV
Lifetime Value — total revenue one customer generates for your business across every job, repeat, and referral.
Lets you spend more to acquire a customer if they refer or repeat. High-LTV service businesses can outbid every competitor.
LTV — Lifetime Value — is the total net revenue a customer generates over their entire relationship with your company. For service businesses, LTV includes initial install or repair revenue, recurring maintenance, warranty extensions, referrals, and upsells. LTV changes how you evaluate CPL and CPA — a high LTV justifies higher upfront acquisition costs. Calculate LTV by averaging revenue per customer, subtracting direct service costs, and projecting repeat purchases and referral-driven clients over a reasonable horizon (often 3–5 years for home services). Don’t be optimistic: use conservative retention and referral rates based on your data. LTV should be segmented by service line and customer type because roof installations produce different lifetime flows than seasonal tune-ups. Use LTV to set acquisition budgets, decide on lead magnet offers, and determine acceptable ROAS. Also track “payback period”: how long until the customer covers acquisition cost. The smarter your LTV calculations, the more confidently you can scale campaigns that initially look expensive but pay off long-term.
- A roofing company calculates LTV as $7,200 including a replacement, seasonal maintenance, and two referral-driven jobs over 5 years.
- An HVAC company’s LTV increases when adding service contracts; customers with maintenance plans spend 40% more over three years.
- An epoxy contractor sees higher LTV in commercial repeat clients versus one-off residential customers and budgets ad spend accordingly.
Using a single, company-wide LTV figure; the mistake is not segmenting by service, leading to wrong acquisition budget decisions.
— LTV in practice
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