LTV (lifetime value), also called CLV, is the total net revenue a brand expects to earn from a customer over the full relationship, not just the first purchase. In affiliate programs, LTV tells a brand how much it can afford to pay to acquire a customer through a partner, whether as a fixed CPA, a revenue share or a hybrid of both.
How it works
LTV is estimated from historical cohorts: group customers by acquisition month or source, then track the net revenue they produce over 6, 12 or 24 months. For a store this is the margin on repeat orders; in iGaming it is usually NGR per player; for subscriptions it is net revenue per month multiplied by the expected lifetime.
A simple version:
LTV = average net revenue per customer per month × average lifetime in months
Example
Example: a subscription app earns $12 net per paying customer per month, and customers stay 10 months on average.
LTV = $12 × 10 = $120
If the brand targets a 3:1 ratio of LTV to acquisition cost, it can pay up to $40 per customer. A $35 CPA leaves margin; a $60 CPA does not.
Why it matters
- Brands set CPA ceilings and RevShare percentages from LTV. Measuring LTV per affiliate shows which partners send customers who stay, not just customers who convert once.
- Affiliates can use LTV in negotiations: traffic with proven retention justifies a higher CPA or a better hybrid deal.
- Quality control. A source with normal conversion volume but near-zero LTV is a warning sign for incentivized traffic or bonus abuse.
LTV is an estimate, and young cohorts are noisy. Revisit it as data matures, and agree in the contract on how quality is measured if commissions depend on it. How LTV shapes deal structure is covered in CPA vs RevShare vs Hybrid.
Related: CPA, RevShare, NGR, hybrid deal.