LTV (lifetime value)

Not revenue. Gross profit. If a customer pays you ₦10,000 a month and it costs you ₦4,000 a month to serve them, you are earning ₦6,000, and that is the number to use.

Multiply that monthly gross profit by how many months an average customer stays. If you have not been trading long enough to know how long they stay, say so rather than assuming. A young company estimating a five-year lifetime is describing a hope, not a measurement.

This is the single most inflated number in early-stage decks, usually by using revenue instead of gross profit, or by assuming a retention period longer than the company has existed.

• CAC (customer acquisition cost) — What it costs you, all in, to win one paying customer.
• LTV to CAC ratio — How many naira of lifetime value each naira of acquisition buys.
• Churn — The share of customers, or of revenue, that leaves in a period.