SaaS revenue models are changing, and so should our SaaS metrics. A SaaS founder emailed me recently about the customer lifetime value metric. His SaaS company has significant usage revenue in addition to traditional subscription MRR. However, traditional SaaS metrics are commonly set up for just one revenue stream. Customer lifetime value (LTV or CLTV) […]
CLTV
LTV to CAC Ratio of Three | Myth or Legend
Almost everyone in SaaS has heard of the LTV to CAC ratio. And almost everyone has heard that we should target an LTV to CAC ratio of at least three. This was popularized (I believe) by the great content published by David Skok on SaaS metrics. But what does it mean to have an LTV […]
SaaS Showdown – CAC Payback Period vs LTV/CAC
CAC Payback Period vs. LTV/CAC This post was inspired by a SaaS metrics question posted on Quora. The user asks, “what is more important? CAC Payback Period or LTV/CAC?” Great question, but it left me scratching my head, because it’s a difficult question to answer anecdotally. Both are important in your SaaS business but should […]
How to Calculate Customer Lifetime Value (CLTV)
Customer lifetime value is a ubiquitous SaaS metrics. As a standalone metric, it doesn’t mean much. We must compare it our unit cost CAC to provide context on sales and marketing efficiency., In this post, I’ll explain how I calculate LTV. There are lovers and haters of this metric, but let’s at least put in […]