What is Lifetime Value?
Lifetime Value or LTV is a prediction of how much money you can expect to receive from a donor before they churn. This information can help you make important decisions about your fundraising. A high LTV is a good thing! It means you can expect to receive lots of revenue from donors before they lapse. So you can afford to spend a bit of money on appeals, marketing, support, and so on to acquire them in the first place.
How is it calculated?
The Lifetime value calculation is simple, but it relies on a few other metrics that can be tricky to calculate. Donor lifespan, average donation amount, and frequency of donation (the number of gifts a donor leaves in one year). Lifespan × Average donation amount × (Total # of donations ÷ Total # of donors) = LTV