Average revenue merchants earn from a single subscriber.
Lifetime value (or LTV) in subscriptions is the average revenue merchants earn from a single customer over the lifespan of a subscription. Subscription businesses that emphasize long-term relations with their subscribers have an edge over regular stores due to increased subscription duration, which boosts LTV.
Three factors are taken into account when calculating LTV in subscriptions: the average number of purchases, the average purchase value, and the average subscription lifespan.
Taken together, the average number of purchases and the average purchase value will determine how much on average a subscriber will spend on their subscription throughout its duration. This average spend then needs to be multiplied by the average subscription lifespan to calculate LTV.
The average number of purchases in subscription relates to how frequently subscription orders are placed, which depends on the length of the subscription cycle and can span from a couple of days to even a couple of months.
The average subscription lifespan is the period over which the subscriber retains an active subscription. It can be boosted with loyalty discounts, surprises, and various anti-churn mechanisms.
The average purchase value is the total value of an average subscription order. It can be increased through contextual upsells and letting customers easily add more products to their own subscriptions in the Customer Portal.