How To Calculate LTV in AgileCRM | Arithmix

Calculating LTV (Lifetime Value) is a crucial aspect of any business strategy. It helps you determine the value of a customer over the entire duration of their relationship with your company. This value can help you make informed decisions about marketing, sales, and customer retention. In this article, we will discuss what LTV is, when it is valuable to calculate it, and how to calculate it.

What Is LTV?

LTV is the total revenue a customer generates for your business over the course of their relationship with your company. This includes all purchases, subscriptions, and any other revenue streams that the customer generates. The LTV is calculated by multiplying the average revenue per customer by the average customer lifespan.

For example, if your average customer spends $100 per month and stays with your company for 12 months, the LTV would be $1,200 ($100 x 12 months). This means that the customer is worth $1,200 to your business over the course of their relationship with your company.

When Is It Valuable To Calculate LTV?

Calculating LTV is valuable for any business that wants to make informed decisions about marketing, sales, and customer retention. By knowing the LTV of your customers, you can determine how much you can spend on acquiring new customers and retaining existing ones. This information can help you optimize your marketing and sales strategies to maximize revenue.

Additionally, calculating LTV can help you identify your most valuable customers. These customers are the ones who generate the most revenue for your business and are the most loyal. By identifying these customers, you can create targeted marketing campaigns and loyalty programs to retain them and increase their lifetime value.

How to Calculate LTV

Calculating LTV is a simple process that involves two key metrics: average revenue per customer and average customer lifespan. To calculate LTV, follow these steps:

1. Calculate the average revenue per customer over a specific period of time (e.g. a month, a quarter, or a year).
2. Calculate the average customer lifespan (i.e. how long a customer stays with your company on average).
3. Multiply the average revenue per customer by the average customer lifespan to get the LTV.

For example, if your average revenue per customer is $100 per month and your average customer lifespan is 12 months, the LTV would be $1,200 ($100 x 12 months).

Calculating LTV is an important part of any business strategy. By knowing the value of your customers over the course of their relationship with your company, you can make informed decisions about marketing, sales, and customer retention. Use the steps outlined in this article to calculate your LTV and optimize your business strategy.

How Do You Calculate LTV in AgileCRM

AgileCRM itself isn’t naturally geared towards letting you calculate complex metrics like LTV. As an alternative, teams typically use products like Arithmix to import data from AgileCRM and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like AgileCRM, combine it with data from other systems, and create calculations like LTV.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating LTV in Arithmix

Calculating metrics like LTV is simple in Arithmix. Once you've created your free account, you’ll be able to import your AgileCRM data, and use it to create natural language formulas for metrics like LTV.

Arithmix is designed to give you the power to build any calculations you want on top of your AgileCRM data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.