Chart: Customer Lifetime Value (LTV)
The Customer Lifetime Value (LTV) chart tracks the estimated revenue you'll receive from an average subscriber over their entire relationship with your business. For SaaS companies, LTV is a critical metric for evaluating the return on customer acquisition spend—as a rule of thumb, it should be at least three times your customer acquisition cost (CAC).
Monitoring this chart over time helps teams balance growth investment against long-term revenue potential.
If you're new to ChartMogul, get to know how charts work.
This metric is also known as Lifetime Value (LTV).
What insights can I gain from Customer Lifetime Value?
LTV is also useful when comparing cohorts (groups) of customers to see which cohort generates the highest ROI on customer acquisition spend.
Increasing average revenue per account (ARPA) and decreasing customer churn both result in a higher LTV. Thus, closely managing these two metrics is key to improving LTV.
Chart Notes
- ChartMogul can only calculate LTV when your customer churn rate is not zero.
- LTV tends to fluctuate more on a month-by-month basis for businesses with a lower number of paying customers (due to the smaller sample size).
Calculation
ChartMogul calculates Customer Lifetime Value as Average Revenue Per Account in each report interval divided by a six-month trailing average of Customer Churn Rate for that interval (the average of the churn rates from the previous six months, excluding the current month).
For example, with an ARPA of $100 and a 5% six-month trailing average of customer churn rate, LTV is $2,000.
Chart Data
The Chart Data table for Customer Lifetime Value works differently than other charts. It provides the following breakdown:
- Average Revenue Per Account — The total MRR in the report interval divided by the number of subscribers in the interval. See Average Revenue Per Account.
- Customer Churn Rate (6/mo avg) — A six-month trailing average of Customer Churn Rate (the percentage of subscribers who canceled their last subscription) calculated for the report interval. This is the average of the churn rates from the previous six months, excluding the current month.
- Customer Lifetime Value — Average Revenue Per Account divided by Customer Churn Rate (6/mo avg).
- Change — The increase or decrease in Customer Lifetime Value from the previous report interval, shown as a percentage.
Next Steps
- Read about LTV in our SaaS metrics library.
- See how much MRR you retain month by month after a customer begins a subscription with Net MRR Retention.
- Use Average Sale Price as an early indicator of whether LTV is likely to increase or decrease.
- Segment this chart by marketing channel, region or a custom attribute such as training program completion to see which subscribers have the highest LTV.