Post by account_disabled on Jan 24, 2024 13:57:56 GMT 7
LTV is the lifetime value of a customer. It is calculated to understand the margins of the business as a whole, as well as individual categories of its clients. It is believed that LTV must be three times the cost of customer acquisition for a business to be considered “healthy”. Let's look at some ways to increase customer lifetime value. Reading time: 12 minutes What is LTV How to calculate LTV Client retention: how to increase LT Customer Support and Customer Success Increase in average bill or ARPU Finding or creating additional products Increasing limits Promotions for long payments Personal services Price increase Conclusion What is LTV LTV, LifeTime Value - translated from English as “lifetime value”, a metric of unit economics.
It describes the Fax Lists amount of funds received from one “unit”: client, user, partner, etc., during the period of cooperation. This is a high-level indicator, that is, it is calculated based on data that is derived from statistics collected by the company. At the same time, the calculation methods and data that are used as a basis depend on the company’s business model. Let's take a closer look at how to calculate LTV. How to calculate LTV The basic LTV formula looks like this: how to calculate LTV Companies adapt this formula to suit the specifics of their business model. Some consider the entire income of the company as “money”, others take into account the net profit, others consider the gross profit, etc.
There is also no unified solution for “units”. Let's imagine a company that creates freemium games - you can play both for free and with a premium account. The company can calculate the total LTV for all users, and then separately for premium players and those who have not purchased an account. Even “time” is an ambiguous concept here. It would seem that since this is Lifetime Value, it should be considered for the entire Lifetime. But this only applies to companies that work on a subscription or monthly fee basis, because their total income from the client actually grows over time. LTV upon subscription Source For other companies, LTV reaches a plateau - large payments are made at the start, but over time, customers pay less and less, although they continue to use the product.
It describes the Fax Lists amount of funds received from one “unit”: client, user, partner, etc., during the period of cooperation. This is a high-level indicator, that is, it is calculated based on data that is derived from statistics collected by the company. At the same time, the calculation methods and data that are used as a basis depend on the company’s business model. Let's take a closer look at how to calculate LTV. How to calculate LTV The basic LTV formula looks like this: how to calculate LTV Companies adapt this formula to suit the specifics of their business model. Some consider the entire income of the company as “money”, others take into account the net profit, others consider the gross profit, etc.
There is also no unified solution for “units”. Let's imagine a company that creates freemium games - you can play both for free and with a premium account. The company can calculate the total LTV for all users, and then separately for premium players and those who have not purchased an account. Even “time” is an ambiguous concept here. It would seem that since this is Lifetime Value, it should be considered for the entire Lifetime. But this only applies to companies that work on a subscription or monthly fee basis, because their total income from the client actually grows over time. LTV upon subscription Source For other companies, LTV reaches a plateau - large payments are made at the start, but over time, customers pay less and less, although they continue to use the product.