1/churn” is the wrong calculation of LTV for young companies

For SaaS companies, tracking the Expected Lifetime Value of a Customer (LTV) is one of the most critical key performance indicators (KPIs) that they can track, because it has massive implications on the unit economics, and therefore viability, of their businesses.

For both transactional, and recurring revenues (subscription) businesses the ratio between Customer Acquisition Cost (CAC — how much you pay to get the customer in the door), and the LTV of that customer (how much money they will deliver to you) → the CAC:LTV ratio…