How does LTV help marketing strategy?

• A. It Is Used to Segment Customers by Profitability to Tailor Marketing.
• B. It Is Used to Forecast Supplier Prices.
• C. It Measures Overall Market Size.
• D. It Predicts Tax Liabilities.

Answer: (B)

Lifetime Value (LTV) shows how valuable a customer is over the entire relationship, which directly shapes marketing strategy. By estimating how much revenue a typical customer will generate across their time with the brand and weighing that against the cost to acquire and serve them, you can spot which customer groups are most profitable. If a segment has high LTV, you can justify higher or smarter marketing spend, invest in retention and personalized campaigns, and tailor offers to that group. If a segment’s LTV is low, you may tighten marketing spend or rethink the value you provide to that segment. This approach helps allocate budget to the initiatives that drive the best overall return and improves revenue forecasting. The other options don’t align with marketing strategy—LTV isn’t used to forecast supplier prices, measure overall market size, or predict tax liabilities.