3 unique guides to Calculate Customer Lifetime Value (LTV)

Fri, 19 Jun 2015 17:27:05 -0500

Customer Lifetime Value (LTV) is an estimate of the average gross revenue that a customer will generate before they churn (cancel).

Why should I care about LTV? Primarily to apply a limit to your Customer Acquisition Cost (CAC) - if you're spending more on acquisition than you anticipate to earn from the customer in revenue, you're going to be in a bad place very soon (unless you have a bottomless pot of money to spend on acquisition).

Guide No. 1 by ChartMogul (Advanced SaaS)

Most SaaS-savvy entrepreneurs will tell you that Customer Lifetime Value (or LTV) is something that you absolutely should be estimating, tracking and improving as one of your key focus metrics. But a big problem in this area is that with all of the material available on the topic, there’s no clear answer to the question of how you should be estimating or using LTV in your business (in fact, the usual answer is that it’s very specific to the characteristics of each business).

At ChartMogul we’ve distilled and compiled a large collection of guidance and resources, to bring you the ultimate guide on everything you need to know on the topic. This 4-page PDF serves as a one-stop shop for LTV formulas, precautions and tips for everything LTV-related.

Download ChartMogul Guide

Guide No.2 by Hubspot ( Easy read for Ecommerce )

Every kid wonders “when will I ever use this?” while slogging through their algebra homework in high school. If you were one of those kids, today’s the day. Hallelujah (or the opposite of hallelujah), it’s time to put those math skills to work. You’re going to need them when calculating the lifetime value of your ecommerce customers.

Download HubSpot Guide

Guide No. 3 by Joel York ( Chaotic Flow )

I’ve wrapped up the highlights of my SaaS metrics series into a tidy SaaS Metrics Guide to SaaS Financial Performance. Like the original SaaS metrics series, this reference guide presents simple rules-of-thumb and graphic visualizations that capture the dynamic relationships between core SaaS metrics and SaaS financial performance.

It is NOT a comprehensive overview of SaaS metrics, but a deep dive into the most critical SaaS metrics with the goal of fostering intuition and deeper understanding of SaaS financial performance, including charts, formulas, definitions, sample calculations, and hyperlinks back to the full SaaS Metrics Rules-of-Thumb posts. Feel free to pass it along. Cheers! JY.

Download Chaotic Flow Guide

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