{"id":9390,"date":"2023-03-29T15:25:32","date_gmt":"2023-03-29T19:25:32","guid":{"rendered":"https:\/\/www.sage.com\/en-ca\/blog\/?post_type=sage_glossary&#038;p=9390"},"modified":"2023-03-29T15:25:32","modified_gmt":"2023-03-29T19:25:32","slug":"what-is-customer-lifetime-value-cltv","status":"publish","type":"sage_glossary","link":"https:\/\/www.sage.com\/en-ca\/blog\/glossary\/what-is-customer-lifetime-value-cltv\/","title":{"rendered":"What is customer lifetime value (CLTV)?"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-ca\/blog\/glossary\/\" class=\"entry-header__link\">Glossary definition<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tWhat is customer lifetime value (CLTV)?\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"What is customer lifetime value (CLTV)?\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-ca\/blog\/glossary\/what-is-customer-lifetime-value-cltv\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n\n<p class=\"\">Customer lifetime value (CLTV) measures the expected revenue from a customer for the duration of their relationship with your company. When you group cohorts and measure CLTV against other cohorts, you will be able to measure which cohort is your most profitable. This insight can help you determine where to focus your growth efforts and budget.<\/p>\n\n\n\n<p class=\"\">CLTV for SaaS companies is often calculated and paired with Customer Acquisition Costs (CAC). The ratio of CLTV \/ CAC takes your cohort analysis further by including the sales and marketing costs. An&nbsp;<a href=\"https:\/\/www.sage.com\/en-us\/blog\/the-latest-saas-metrics-to-grow-your-business-and-impress-investors\/\r\" rel=\"noreferrer noopener\" target=\"_blank\">optimal benchmark CLTV to CAC ratio<\/a>&nbsp;is 3 to 1.<\/p>\n\n\n\n<p class=\"\">To calculate CLTV, you subtract the customer acquisition cost (CAC) from the expected recurring profit of a customer. As CLTV includes renewals, upsells and more, your calculation may rely more heavily on estimates if you are a seed company, and more on data, including churn, as you mature. Many\u00a0<a href=\"https:\/\/www.sage.com\/en-us\/sage-business-cloud\/intacct\/industry\/subscription-saas\/\r\">cloud accounting solutions for SaaS companies<\/a>\u00a0include a\u00a0<a href=\"https:\/\/www.sage.com\/en-us\/sage-business-cloud\/intacct\/industry\/subscription-saas\/saas-metrics\/\r\">SaaS metrics dashboard<\/a>\u00a0and automate CLTV calculations with real-time data.<\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p class=\"cta-content__title\">Get a roundup of our best business advice in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-8949a954-88b2-43bb-8b8a-77c53eb34350\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-1073797282-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-ca\/blog\/wp-content\/uploads\/sites\/12\/2022\/04\/GettyImages-1073797282-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Customer lifetime value (CLTV) measures the expected revenue from a customer for the duration of their relationship with your company. When you group cohorts and measure CLTV against other cohorts, you will be able to measure which cohort is your most profitable. This insight can help you determine where to focus your growth efforts and [&hellip;]<\/p>\n","protected":false},"author":1169,"featured_media":0,"template":"","meta":{"_sage_video":false,"footnotes":""},"tags":[162,258],"class_list":["post-9390","sage_glossary","type-sage_glossary","status-publish","hentry","tag-accounting-101","tag-cloud-financial-management"],"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice Canada English","distributor_original_site_url":"https:\/\/www.sage.com\/en-ca\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/sage_glossary\/9390","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/sage_glossary"}],"about":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/types\/sage_glossary"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/users\/1169"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/sage_glossary\/9390\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/media?parent=9390"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-ca\/blog\/api\/wp\/v2\/tags?post=9390"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}