When does a company need to use the LTV metric? How to calculate the LTV of different types of customers? And why can we almost never use it without the CAC metric?
In the 4th episode of Foundations, Lior Krengel and Eran Zinman talk about the LTV metric – (Customer) Lifetime Value, which indicates the total revenue a company can expect from a single customer. Even though investors love it, this metric is not an easy one to calculate or to even use regularly. But even so, Lior and Eran explain how we can practically use it, why the LTV/CAC ratio is so important, and how to calculate LTV for a customer who continues to use our product without ever canceling his subscription.