What is Lifetime Value?
Lifetime Value or LTV is a prediction of how much money you can expect to make from a customer before they churn. This information can help you to make important decisions about your business.
A high LTV is a good thing! It means you can expect to make lots of money on customers before they cancel. So you can afford to spend a bit of money on marketing, on boarding, support, and so on to acquire them in the first place.
How is Lifetime Value calculated?
Though the lifetime value calculation is simple, it relies on two other metrics that can be tricky to calculate: User Churn and ARPU.
How do I increase my LTV?
You can improve LTV on two fronts: ARPU and User Churn.
Increase your ARPU by raising prices, or funnelling folks towards your premium plans.
Lowering your churn rate will also improve your LTV. You can learn some strategies to lower your churn rate in our Slaying the Churn Beast Academy Article.
How can I learn more about my LTV?
Figure out which plans have the best LTV, and funnel new and existing customers toward those plans.
Compare Date Ranges
Find out how your last 30 days of LTV compares to the same period 6 months ago.
Take out the bumps in your data and get a clearer idea of how LTV is progressing. This is especially helpful for looking at your LTV with a long date range.
Mark important landmarks in your business. Things like new feature releases and marketing and retention campaigns. See how your LTV (and other metrics) change after those big days!
See how your LTV compares to other businesses with a similar ARPU.