How To Calculate LTV in SugarCRM | Arithmix

Calculating the lifetime value (LTV) of a customer is an important metric for any business. It helps you understand the total revenue a customer will generate over the course of their relationship with your company. This information can help you make informed decisions about how much to invest in acquiring new customers and retaining existing ones. In this article, we'll explain what LTV is and when it's valuable to calculate it.

What Is LTV?

LTV is a measure of the total revenue a customer will generate for your business over the course of their relationship with you. This includes all purchases they make, as well as any recurring revenue they generate through subscriptions or other ongoing services. To calculate LTV, you need to know the average revenue per customer (ARPU) and the average customer lifespan (ACL).

ARPU is the average amount of revenue generated by each customer. This can be calculated by dividing your total revenue by the number of customers you have. ACL is the average length of time a customer stays with your business. This can be calculated by dividing the total length of time all customers have been with your business by the total number of customers.

Once you have these two figures, you can calculate LTV by multiplying ARPU by ACL. For example, if your ARPU is $100 and your ACL is 3 years, your LTV would be $300.

When Is It Valuable To Calculate LTV?

Calculating LTV is valuable for any business that wants to make informed decisions about customer acquisition and retention. By understanding how much revenue a customer will generate over their lifetime, you can make more informed decisions about how much to invest in acquiring new customers and retaining existing ones.

For example, if you know that the LTV of a customer is $300, you might be willing to spend up to $150 to acquire that customer. This is because you know that over the course of their relationship with your business, they will generate more revenue than the cost of acquiring them.

Similarly, understanding LTV can help you make decisions about how to retain existing customers. If you know that a customer has a high LTV, you might be willing to invest more in customer service or loyalty programs to keep them happy and engaged with your business.

In conclusion, calculating LTV is an important metric for any business that wants to make informed decisions about customer acquisition and retention. By understanding the total revenue a customer will generate over their lifetime, you can make more informed decisions about how much to invest in acquiring new customers and retaining existing ones.

How Do You Calculate LTV in SugarCRM

SugarCRM 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 SugarCRM 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 SugarCRM, 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 SugarCRM 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 SugarCRM 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.