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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