Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV or LTV) is the total gross profit a customer generates across their entire relationship with your business — the ceiling on what you can spend to acquire them.
What is Customer Lifetime Value (CLV)?
CLV (or LTV) estimates the total margin a single customer will contribute over the life of the relationship. The simplest SaaS formula: (ARPU × gross margin) ÷ monthly churn rate. More sophisticated models segment by cohort, plan tier, and acquisition channel.
Why it matters
- Sets the ceiling for what you can sustainably spend on CAC
- Identifies which segments are worth doubling down on (highest LTV per CAC dollar)
- Forces explicit churn assumptions, which is where most LTV models go wrong
Levers to increase LTV
- Reduce churn — biggest lever by far for most SaaS
- Expand revenue — usage-based pricing, seat expansion, upsell to higher tiers
- Improve gross margin — efficient infrastructure, fewer support escalations
How TexAu helps
Identify high-LTV-pattern accounts in your existing customer base (industry, size, signals), build a lookalike list, and run prioritized outbound — concentrating CAC on lookalikes of your best customers.
Related