AKA:
Customer lifetime value (CLTV)
What does it mean:
Plain and simple it’s the average revenue that each of your customers gives you over their lifetime. It’s most applicable to a recurring SaaS business model but can be used in other models.
The Formula:
Average Monthly Recurring Revenue Per Customer (ARPU) ÷ User Churn Rate = LTV
Use it in a sentence:
To colleagues:
“Our LTV has been very flat, are there any add-on services we can start to sell to increase it?”
To investors:
“We are improving our LTV by reducing churn and selling into larger companies now.”
At a party:
“I don’t want to brag, but our LTV is higher than Dropbox.”
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More Marketing Definitions
- Average Revenue Per User (ARPU)
- Annual Recurring Revenue (ARR)
- Average Order Value (AOV)
- Customer Acquisition Cost (CAC)
- Conversion Rate Optimization (CRO)
- Cost Per Click (CPC)
- Cost Per Lead (CPL)
- Cost Per Mille (CPM)
- Call To Action (CTA)
- Click Through Rate (CTR)
- Google Analytics (GA)
- Gross Merchandise Value (GMV)
- Key Performance Indicators (KPI)
- LifeTime Value (LTV)
- Monthly Recurring Revenue (MRR)
- Month on Month (MoM)
- Net Promoter Score (NPS)
- Search Engine Optimization (SEO)
- Search Engine Results Page (SERP)
- Social Media (SoMe)
- Unique Selling Proposition (USP)
- Urchin Tracking Module (UTM)
- Word of Mouth (WOM)