Learn how to calculate Customer Lifetime Value (CLTV) to optimize your subscription business strategy, boost customer retention, and maximize revenue effectively.
Overview of CLTV
The Customer Lifetime Value (CLTV) metric can be viewed on ChurnIQ's Overview page. It is also available at the level of individual channels on the Offer step of the Retention Journey, which refers to the stage where data is broken down by specific offers to better understand retention dynamics. For more details, please refer to our Retention Journey guide.
The CLTV metric has been updated to include all product types, including non-recurring offers, and to focus on historical revenue. This change ensures a more comprehensive reflection of customer value and aligns with diverse monetization models in the industry. Based on the total revenue from churned subscribers, the new CLTV gives the real value of a subscriber.
CLTV is a key indicator of the health of your subscription business, reflecting the expected value of a customer who subscribes to your service. In ChurnIQ, CLTV is calculated as:
Lifetime Value = Lifetime revenue from churned customers / Churned customers
Using churned subscribers provides a realistic view of the value generated from customers who have left, offering insights for improving revenue retention.
Growing CLTV
In subscription services, growing CLTV can be achieved by encouraging subscribers to upgrade to higher-value offers, such as through targeted promotions, personalized upsell emails, or loyalty programs.
Importance of Tracking CLTV
CLTV is an essential metric to track over time, as it captures the value that your subscribers assign to your service. A higher CLTV indicates that subscribers place greater value on their experience with your content.
CLTV helps assess the value of further investments in campaigns or content, providing valuable insights for strategic decisions regarding where to allocate resources most effectively.