Lifetime Value of a Client

The lifetime value of a client (LTV) is a metric that represents the total net profit a company can expect to generate from a single customer over the entire duration of their relationship.

A common way to calculate LTV is:
LTV = (Average Monthly Recurring Revenue per customer × Gross Margin %) / Monthly MRR Churn

Why LTV is Important

• Shifts Focus to the Long-Term: It encourages businesses to focus on building long-term relationships with customers, rather than just making a single sale.
• Informs Marketing Decisions: It helps you determine how much you can afford to spend to acquire a new customer.
• Guides Customer Service: When you understand the LTV of a client, you are more likely to provide them with exceptional service to ensure their loyalty.

The "Treat Them Like Gold" Principle

Your best customers, especially those in your The Dream 100 list, should be treated like gold. This means:

• Personalized Attention: Go out of your way to make them feel special.
• Exceptional Service: Provide a level of service that far exceeds their expectations.
• Exclusive Offers: Offer them special discounts or perks that are not available to other customers.

By focusing on the LTV of your clients, you can build a loyal customer base that will drive sustainable growth for your business.