What is member lifetime value?
Member lifetime value is the total revenue a member generates over the whole relationship, from joining to leaving, including membership fees and anything else they buy, and it is the figure that tells an operator what a member is worth acquiring and keeping.
Why it matters for a platform decision
Software spend is almost impossible to justify against a monthly fee and straightforward to justify against lifetime value. If a member stays several months longer because the experience improved, the arithmetic across a large base gets persuasive quickly.
This is the frame that moves platform investment from a cost line to a return calculation. Framing software spend against member lifetime value also imposes discipline, because it forces you to name which behaviour you expect to change and by how much.
Calculate it conservatively
The common error is optimism. Using an average that includes long-tenured members, forgetting that discounts and free periods reduce revenue, and ignoring the cost of serving a member all inflate the number.
A defensible version uses average monthly revenue per member net of discounts, multiplied by realistic average tenure from cohort data, and subtracts the cost to serve. A conservatively calculated member lifetime value is smaller than the first estimate and survives scrutiny.
Ancillary revenue is where the upside sits
Membership fees are capped by what the market pays. Personal training, programs, nutrition coaching, merchandise and retail are not, and a member app is one of the few channels that can present them at a moment when the member is already engaged.
Chains that treat the app as a service channel only tend to leave this unused. Chains that treat the member app as both a service channel and a storefront usually find the storefront pays for the platform.
Questions operators ask
Four that come up on almost every call about member lifetime value.
Average monthly revenue per member net of discounts, multiplied by average tenure drawn from cohort data, less the cost to serve. Build it from your own cohorts rather than an industry figure, because tenure varies enormously by model.
Because it converts a software decision into a return calculation. Measured against a monthly fee, most platform spend looks expensive. Measured against the lifetime value of a base that stays slightly longer, it usually does not.
Yes, and this is often where the real number lives. Ancillary revenue is both larger and more expandable than membership fees, and a member app is one of the few places you can offer it without a staff conversation.
It tends to redirect effort toward tenure and ancillary revenue rather than acquisition features. Onboarding, adherence and the ability to sell additional services inside the app all affect the number directly, where a redesigned signup flow mostly does not.
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