Customer Lifetime Value is the total revenue generated by an individual customer over the duration of their relationship with the company.
There are multiple ways to calculate customer lifetime value.
Understanding how these calculations work will help you identify which formula works best for your business.
The basic customer lifetime value (LTV) is calculated by multiplying the total monthly recurring revenue (MRR) by the average length of service (LOS).
This calculation assumes that customers renew at a constant rate and that they don’t churn.