Customer lifetime value

We listed customer lifetime value or CLTV as an item in the Quantitative metrics – where evidence emerges section, but we feel it deserves a separate discussion because of what it should represent to forward-leaning companies. Because subscription businesses are completely reliant on recurring revenue – since profits aren’t realized until customers renew their subscriptions at least once – within companies, there should be an intense focus on understanding and executing strategies to ensure all customers stay through many renewal cycles. It’s revenue growth that is rewarded by investors and what drives up a company’s valuation in the market.

So, CLTV should be considered as more than a metric like any other that the CS organization tracks. Because of its nature as a long-term information source, it could even be seen as a proxy for the state of health of the company, a company that is attractive to investors because...