Cost of acquisition (CAC);
mean life time (CLTV);
average profit per period (ARPU).
It is also worth noting that LTV is not a static indicator and can change depending on many factors, including changes in prices for products or services, competition in the market, and other factors. Therefore, it is important to periodically recalculate LTV in order to make the right decisions on business strategy.
The present calculation methods, in simple terms
Give an idea of the value of the client. Further development strategies are built on the basis of specific indicators.
In business, LTV metrics are us for several reasons:
profitability assessment;
determining the importance of individual clients (which ones bring more profit and which ones less);
investment decision us in bc data vietnam business making;
improving the quality of service.
Business leaders get a real assessment so they can understand which partners to focus on. It also makes it easier to choose a strategy because they get clear examples of what people are willing to spend money on. The benefit for users is that businesses improve products and services that are in real demand.
Calculation formulas
In large companies, the return on advertising investments is estimat bas on precise metrics. It follows that LTV us in business is closely relat to CAC — the cost of attracting each new customer. Requirements vary depending on the specifics of the business, but on average, the profit should be three times greater than the cost of attraction.
There are several us in business formulas for determining LTV depending on the data us:
Simple LTV formula
LTV formula taking into account marginality
The discount rate here springfield’s new influencer campaign: zero gravity is us to take into account the time value of agb directory money in the future, and the retention rate reflects how many people will stay in the future.
Cohort-Bas LTV Formula