Customer lifetime value (CLV) is one of the key metrics for a subscription / SaaS business. It tells you how much money you make per customer overall, or how valuable each customer is to your business.
Please watch our Youtube video for a detailed walk-through explaining how to calculate customer lifetime value for a 3M subscription business. We will discuss how to perform the calculation even if you are pre-revenue as well as how to formulate assumptions.
The ratio of CLV/CAC (customer lifetime value to customer acquisition cost) is another important metric to keep in mind as it measure whether your business model is financially feasible. If it costs you more to acquire a customer than the amount of money you will ever make from that customer, you don't have a profitable business.
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