How to calculate Customer Lifetime Value.

Revenue based formula: (1 / Customer Churn Rate) * ARPU

Profit based formula: ((1 / Customer Churn Rate) * ARPU ) * Gross Profit Margin

Also abbreviated as LTV.

Estimate of the projected total value of a customer.

“Value” originally meant “profit”, but there are several variations of this metric. For some reason everyone seems to be nowadays calculating the revenue-based variation so that’s what FirstOfficer offers too.

However, it’s strongly recommended that you convert your CLTV to the profit-based formula before using it.

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