To calculate ARPU, simply divide the Monthly Recurring Revenue by the number of active customers. 6. Lifetime Value (LTV) If you are looking for longer-term customer relationships, this metric is invaluable. Lifetime Value (LTV) deals with the expected amount a customer will spend on your product throughout the relationship. Hence the name “Lifetime”. By calculating the LTV, it is possible to elaborate a smarter budget tied to the company’s real situation.
you can decide how much you are willing to spend on their acquisition and retention, always standing belgium phone number data above the line between expenses and revenue. That’s why the Lifetime Value calculation must be accompanied by another metric, which predicts the acquisition cost per customer. We will talk about this in the next topic. First, let’s understand how the LTV calculation is performed: calculate the Churn Rate; calculate the Average Revenue per User; divide the second value by the first.
Made with Ion 7. Customer Acquisition Cost (CAC) While reading the last topic, you already knew how important it is to understand the Customer Acquisition Cost. This indicator measures the amount of money that your company needs to invest in order to convince a consumer to purchase. Since every business needs to make more money than it spends to survive, the value indicated by this metric must be lower than the LTV.