Lifetime Value (LTV) in the context of an e-commerce website refers to the estimated net profit attributed to the entire future relationship with a customer. It is calculated as the amount of money a customer is expected to spend on a website over the entire course of their relationship with the business. LTV takes into account the revenue generated from purchases, as well as the costs associated with acquiring and retaining the customer, such as marketing and customer service expenses. By calculating LTV, e-commerce businesses can determine the value of a customer and prioritize investments in customer acquisition and retention strategies accordingly. This information helps e-commerce companies make informed decisions about marketing spend, product development, and customer service efforts.
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