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Customer economics
Customer lifetime value
The gross profit a customer generates over their whole relationship: revenue per period, times gross margin, divided by churn.
Owned by: Senior sales analystTest band: Senior sales analyst
The formula
LTV = Revenue per period × Gross margin % ÷ Churn rate
In practice
Use gross margin, not revenue. And segment it: an enterprise customer's LTV and an SMB customer's are different businesses.