Disclaimer: I'm the co-founder of Custora (YC W11), and one of the keys to our product is accurate lifetime value estimation. This is a great rundown of how to

Disclaimer: I'm the co-founder of Custora (YC W11), and one of the keys to our product is accurate lifetime value estimation. This is a great rundown of how to do a descriptive revenue per customer analysis. As many have pointed out here, true CLV really needs to account for the expected value of customers as well -- not just what we have seen, but how we expect customers to behave into the future. This information can help us determine how much to spend on customer acquisition. Even better, performing the calculations across acquisition sources helps us decide where to spend our advertising dollars in future periods. The single most important thing to recognize when building a survival model is that there isn't a constant retention rate. Instead, when customers join, some are good (slow churners) and others are bad (quick churners). The key to an accurate survival analysis (and thus, an accurate LTV number), is getting a sense of this distribution of customers.