How to Increase Customer Lifetime Value for Your SaaS
Published: August 8, 2025
Last updated: August 29, 2025
To increase the customer lifetime value for a SaaS business, you must implement precise strategies that extend customer subscriptions and increase the revenue they generate over time. This metric—known as CLV, CLTV, or LTV —is the definitive indicator of a software company’s long-term financial health and product-market fit. A higher SaaS LTV is the direct result of a systematic, data-driven approach to customer success. This guide presents a methodology that describes factors affecting SaaS customer lifetime value.
To calculate your SaaS customer lifetime value, use our online SaaS CLV calculator
Strategic Onboarding Experience
The onboarding phase is a critical opportunity to influence long-term value. According to Wyzowl, 86% of users say they would be more loyal to a business if the onboarding and educational content was excellent. A generalized tour may not maximize all possible benefits. A superior strategy is all about segmenting users and applying a high-touch, manual process for high-potential accounts to maximize their activation and long-term commitment.
First, you need to decide which onboarding strategy fits your model. Answer these questions to determine the right approach:
- Product Complexity: How much initial setup and learning is required for a user to experience the core value (“aha moment”) of your software? (Low/Medium/High)
- Average Contract Value (ACV): Is your pricing low (e.g., <$50/month) or high (e.g., >$500/month)? Companies with a lower ARPU (e.g., $25-50) often face higher churn, making an effective onboarding even more critical.
- Team Capacity: How many hours per week can your team realistically dedicate to manual onboarding sessions?
Based on your answers, choose a model from the table below.
|
Onboarding Model |
Best For |
Key Characteristics |
|
Low-Touch (Automated) |
Low ACV, Simple Product |
In-app tours (e.g., using Appcues), checklists, email sequences, video tutorials. |
|
Mid-Touch (Hybrid) |
Medium ACV, Moderate Complexity |
Automated onboarding plus triggered live chat (e.g., using Intercom), group webinars. |
|
High-Touch (Manual) |
High ACV, Complex Product |
Mandatory 1-on-1 sessions, custom implementation plans, dedicated success manager. |
For SaaS founders aiming to substantially increase LTV, adopting a High-Touch model for at least a segment of your users is a powerful, albeit counter-intuitive, strategy.
The email client Superhuman, in its early stages, implemented a mandatory 30-minute, one-on-one video call for onboarding new customers, which related to its early adoption and $30/month price. This seemingly unscalable process was critical. It aimed to familiarize users with the software’s workflow, potentially impacting initial user churn. The substantial number of conversations supplied user feedback to the product team, possibly affecting the development loop based on the feedback from active users. The result was a product so sticky that it built a reputation for having long waitlists, a testament to the LTV created by this intensive process.
Check out tools like Calendly or SavvyCal to let users book onboarding sessions. Connect this to your CRM via Zapier to automatically tag users who have completed onboarding, allowing you to track their behavior and LTV against those who did not. A personalized onboarding experience may influence how valued customers feel initially.
The goal of high-touch onboarding is not just to onboard a user; it’s to learn. A 5% increase in customer retention can boost company profitability by 25-95%. The takeaways from these calls are the fastest way to understand and fix the friction points that cause churn.
Free Customer Lifetime Value SaaS Checklist
Stop guessing. Follow these steps to increase your SaaS customer lifetime value.
-
Strategic user onboarding
-
Steps to foster collaborative-led growth
-
Anchoring pricing to a value metric
-
Tips for building a community
-
and more!
Foster Collaborative-Led Growth to Deepen Integration
Integrating a product into a team’s workflow can affect its perceived value and its continued usage. Self-check whether your product is built for collaboration:
- Value Proposition: Is your software’s value proposition significantly enhanced when used by a team versus an individual? (e.g., designing a website vs. writing a personal document).
- Core Object: What is the “atomic unit” of work in your app (e.g., a document, a board, a report)? Is this unit inherently shareable?
- User Roles: Does your product naturally support different user roles (e.g., creator, editor, commenter, viewer)?
If the answer is yes to these questions, a collaborative-led strategy for growth is a primary reason for increasing customer lifetime value SaaS.
Figma, the design tool, is the quintessential example of this model. The core ‘multiplayer’ feature enables simultaneous access to a single file by designers, product managers, and developers. The design workflow changed, moving away from a siloed structure toward a collaborative model. A single designer might join for free, but to work effectively, they must invite their team. This creates a powerful internal loop where the team’s usage naturally pushes the account toward a paid Organization plan to manage projects and permissions. The collaborative entrenchment was a factor in the observed SaaS LTV and the resulting $20 billion valuation.
To implement this, focus on reducing friction for invites and demonstrating multi-user value. Build a seamless invite flow (“Invite your team with one click”) and create team-specific templates that immediately show the benefit of working together.
Track your viral coefficient (k-factor). This is calculated as k = (number of invites sent per user) * (conversion rate of invites). A k-factor above 1 suggests exponential growth, while even a modest k-factor can affect LTV by increasing account footprint. The idea is to propagate usage from a single content user to an entire team.
As teams grow, billing becomes complex. PayPro Global’s subscription management system aims to manage this aspect. It supports seat-based pricing, manages prorated charges when new users are added mid-cycle, and provides a self-service portal where customers can manage their own team size and plan, automating the entire upgrade process without requiring support intervention.
Free Customer Lifetime Value SaaS Checklist
Stop guessing. Follow these steps to increase your SaaS customer lifetime value.
-
Strategic user onboarding
-
Steps to foster collaborative-led growth
-
Anchoring pricing to a value metric
-
Tips for building a community
-
and more!
Anchor Pricing to a Value Metric
A sustainable approach to LTV in SaaS involves aligning customer value with corresponding payments. This is achieved by anchoring your pricing not to a list of features, but to a “value metric”—a unit of consumption that directly correlates with the value your customer receives.
Self-Assessment: Identifying Your Value Metric
- Customer Success: What single usage metric in your product indicates that a customer is succeeding and growing their own business?
- Predictability: Is this metric easy for a customer to understand and predict? (Unpredictable bills cause churn).
- Scalability: Does this metric naturally scale up? (e.g., more contacts, more projects, more data).
Common Value Metric Models
|
Value Metric Type |
Description |
SaaS Examples |
|
Per-User/Seat |
Price increases with each new user added. |
Figma, Slack, Asana |
|
Usage-Based |
Price is based on consumption of a specific unit. |
Twilio (API calls), AWS (compute hours) |
|
Tiered by Core Metric |
Price tiers are defined by a core value unit. |
HubSpot (marketing contacts), Zapier (tasks) |
Twilio prices per API call or phone number, a usage-based model. Developers may begin with a limited budget for a prototype and potentially increase spending as their application gains traction. HubSpot uses a tiered model based on the number of marketing contacts a business stores. HubSpot’s pricing is connected to customer growth, with higher tiers potentially correlating to larger customer audiences and perceived tool value. Both illustrate a connection between pricing and customer value, potentially affecting expansion revenue. According to recent benchmarks, a top-quartile Dollar-Based Net Retention Rate (DBNRR) for public SaaS companies is around 120% or higher, meaning they grow revenue from existing customers by 20% each year.
When changing your pricing model, “grandfather” your existing customers by allowing them to stay on their old plan. This can influence customer loyalty and may affect churn rates among early adopters. Consider offering an incentive to encourage adoption of the new model if it is deemed a more appropriate solution.
Implementing value-based pricing requires a sophisticated billing system. PayPro Global is designed for this complexity. The platform fully supports tiered pricing, per-user models, and metered (usage-based) billing, automating the entire revenue collection and recognition process so you can focus on your product. This flexibility is key to capturing expansion revenue effectively.
Free Customer Lifetime Value SaaS Checklist
Stop guessing. Follow these steps to increase your SaaS customer lifetime value.
-
Strategic user onboarding
-
Steps to foster collaborative-led growth
-
Anchoring pricing to a value metric
-
Tips for building a community
-
and more!
Practice Principled Transparency to Build a Moat
In a crowded market, trust is a competitive advantage. Implementing transparency practices may affect SaaS community loyalty and LTV. This involves sharing your journey, data, and decision-making processes publicly to attract your ideal customers and turn them into advocates. Ask yourself:
- Company Culture: Does your team value openness and direct communication?
- Target Audience: Is your audience (e.g., developers, founders) likely to appreciate and engage with this type of content?
- Competitive Landscape: What are the risks of sharing this information? Can you share the “why” and “how” without giving away your core “what”?
Baremetrics shared its revenue metrics, and GitLab presents a different approach to transparency. The company’s entire 3,000+ page company handbook is public. They share their product roadmap publicly and conduct strategy meetings via live stream on YouTube. The degree of openness relates to a contributor community and a stable customer base involved in the company’s projects. This community can act as a barrier to competitor influence, potentially affecting customer retention and long-term value. We observe a DBNRR of 122% (Q1 2025), potentially linked to customer loyalty.
You don’t have to share everything. Start small. Create a public changelog, write a detailed blog post about why you killed a certain feature, or use a tool like Canny.io to share your public roadmap and gather feedback. Engagement levels may influence trust development, which can impact competitive positioning.
Principled transparency is about sharing the process, not the proprietary secrets. The goal is to build trust and show that you are building in good faith, not to give away your intellectual property. This approach may affect Customer Acquisition Cost (CAC) and organic lead generation within the community.
The community formed through transparency may feature individuals inclined to promote it. PayPro Global’s integrated affiliate management module allows you to easily turn these advocates into partners. You can set up commission structures, provide them with marketing materials, and track their performance, transforming your community into a powerful, LTV-boosting acquisition channel.
Conclusion
In summary, increasing CLV is an exercise in professional, data-driven execution. Implementing specific strategies for onboarding, collaborative-led growth, value-metric pricing, and principled transparency can affect various growth factors. These sophisticated approaches, supported by a strong infrastructure for billing and analytics, are what separate good software businesses from great ones, ultimately building a resilient company with a superior SaaS customer lifetime value.
FAQ
-
Creating a strategic onboarding experience is the most critical first step, as it sets the foundation for the customer relationship and significantly impacts long-term retention.
-
Determine the single usage metric in your product that correlates most closely with the value your customer receives. It should be easy for the customer to understand and should scale naturally as their business grows.
-
Although acquiring new customers is necessary for growth, increasing the LTV of existing customers is usually more profitable. A 5% increase in customer retention can boost profitability by 25-95%, because it costs less to retain a customer than to acquire a new one.
-
A simple formula for CLV is (Average Revenue Per Account / Customer Churn Rate). For a more precise calculation that includes gross margin, you can use a dedicated SaaS CLV Calculator.
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