Customer Lifetime Value is an indicator that informs a company about the amount of money it will receive from a consumer over the entire subscription period. If we compare LTV with CAC, the cost of acquiring a customer, we obtain data on the profitability of the buyer. This indicator can also be used to compare target groups in order to find out which of them brings the highest return on investment and, on this basis, to implement further actions.
How to calculate CLTV?
subscription amount * subscription time
A customer pays PLN 50/month for a subscription term of 6 months.
LTV will amount to 300 PLN