WHY SFM
We believe entrepreneurs should have the best possible resources to help plan and launch their businesses. And we believe those resources should be easy to understand and easy to use. And because entrepreneurs usually have limited resources, we believe those resources should be very affordable for you.

YOUR SUCCESS IS OUR MISSION.

HOW
We help you achieve your goals to clarify and communicate your plan, raise the capital you need, launch your business, and experience success as an entrepreneur.

WHAT
We’ve built what we believe is the finest business planning tool available (and our customers agree) and we want to put it in your hands at a price you can afford. What more could an entrepreneur want?

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  • Wade Myers

Why Does My Customer Life Look So Long in My CLTV Report?

Q: I’ve entered several offerings and my recurring SaaS app-based offerings has a super long customer life of 400 months on my Sales Detail report:

Here are a couple of screen shots for that offering where you can see the 400 month life:


Q: Can please tell me why it is so high and how I make that more reasonable?

A: You’ve entered a 12-month contract at a 97% renewal rate in your assumptions input for that offering, so you have a very long customer life of 400 months that is nearly “eternal” because of your very high renewal rates:


For example, if you enter a 12-month contract with a 0% renewal, your Customer Life would be 12 months, entering 12 months @ 50% renewal rates would be a 24-month life, entering 12 months @ 75% renewal rates would be a 48-month life, and entering 12 months @ 100% renewal rates would be infinity. The higher your renewal rate, the longer your average customer life.


If you are trying to represent a more reasonable Customer Life assumption, simply shorten your contract term or lower your renewal rate.


Most SaaS apps have a contract term of 3 months (quarterly) or 12 months (annually) with renewal rates between 50% and 75%, and would rarely achieve anything in the 90%+ range.

However, if you are confident that you renewal rates are 97%, you should stick with that assumption and simply defend your long Customer Life based on the reasons you believe your customer churn will be so low.

Can't find an answer? Contact us and we'll get back to you!