Customer Lifetime Value is the Key Metric to Recurring Revenue Success

If your business had the choice between one million lifetime customers or two million one-time transaction customers, which would you choose? Selecting the former guarantees a recurring revenue stream for years while the latter only guarantees revenue for that individual transaction. Sounds like a no-brainer, right?

There are many factors that contribute to a successful recurring revenue cycle for your business, from product packaging and pricing to configuring existing systems and operations. There is one particular metric that is especially critical to understanding the success or failure of a recurring revenue program. So important, in fact, that more than 75% of North American senior executives say it is a highly or extremely valuable indicator of success.

We’re talking customer lifetime value (CLV). What is CLV? In short, it can be defined as profitable brand loyalty – the net financial value realized over the life of a customer relationship (costs and revenues). Individual sales that support the goal of maximizing CLV are more valuable to your business than sales that support one-time transactions.

Looking for tips on how to maximize your CLV? Stay tuned for the next blog where we will identify the two major keys to diving long-term, profitable results. Till then, it’s important to remember that CLV is deemed valuable by majority of senior executives today.