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.