LTV is the total revenue gained from a single customer throughout the business relation.
Salesforce LTV
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Consider a SaaS company that provides software subscriptions. The average customer pays $50 per month and typically remains a customer for 24 months. The Customer Lifetime Value (LTV) is calculated by multiplying the average revenue per customer by the number of months they remain a customer.
LTV = Average Revenue per Customer x Customer Lifespan
LTV = $50 x 24
LTV = $1,200
This means each customer, on average, generates $1,200 in revenue over their lifetime with the company.
