Shah: Standard SaaS LTV calculations underestimate long-term multi-product customer value
Dharmesh Shah · The Secrets to Scaling with HubSpot's Founders Dharmesh Shah and Brian Halligan and SaaStr's CEO · Oct 18, 2022 · at 47:03
HubSpot co-founder Dharmesh Shah discusses how SaaS companies model customer lifetime value without factoring in multi-year product expansion.
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“The one thing we miss is that LTV as it's currently measured is based on our current churn rate and current market dynamics. Here's what a customer is worth that we sold right now. But if you've been out for a little while and you're like, oh, maybe we might add another product and here's where the trend line is. What's the actual lifetime value, right? So if it's like, okay, if we're trying to project that the customer is going to be here for seven, 10 years, well, which they will, they're not going to pay exactly the same price they're doing, right? That's not the trend. We know that it's more than that, right?”
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