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What is CLV?

Customer Lifetime Value is the total revenue you can expect from a typical customer before they cancel. If a customer pays $100/month and stays for 20 months on average, their CLV is $2,000.

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How to Calculate It

CLV = ARPA / Customer Churn Rate
Bigdelta uses a 6-month rolling average for the churn rate to smooth out short-term fluctuations. Example:
  • ARPA = $100/month
  • Customer churn rate = 5% per month
CLV = $100 / 0.05 = $2,000

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Why It’s Useful

CLV tells you how much you can afford to spend to acquire a customer. If your CLV is $2,000, spending $500 to acquire a customer makes sense. Spending $3,000 doesn’t. This is a projected estimate based on current ARPA and churn. For actual revenue earned, see Realized CLV. Bigdelta calculates CLV automatically from your billing data.