Post by account_disabled on Dec 4, 2023 23:30:44 GMT -5
In other words, calculating and monitoring lifetime value is essential to make better management and marketing decisions. You must have already noticed, from the example indicated, that it is not complicated to calculate the lifetime value of customers. But, to make it easier, there is a basic formula so that no one makes a mistake when making the famous account. Just follow the model: LTV= (average ticket x average purchases per customer each year) x average relationship time Let's put some real data to make it easier to understand the account: Let's assume that the amount spent, approximately, by your clients throughout the month is $400.00.
The value is payment per month, so the average number of Phone Number List transactions per customer throughout the year will be 12 (1 per month). Finally, let's say the average length of relationship (from purchase to end of relationship) is 3 years. The formula with these numbers would leave the calculation like this: LTV= 400 (average ticket) x 12 (number of purchases per year) x 3 (contract duration) LTV= ($400.00 X 12) X 3 LTV= $4.8 thousand x 3 LTV= $14.4 thousand In this case, the lifetime value of your clients would be $14.4 thousand. This would be the total value invested by a customer in your company. If the retention time were less than one year, it would only be necessary to multiply the average ticket by the total number of purchases.
For example: If the contract period here were 10 months, the bill would be just: LTV= $400.00 X 10 LTV= $4 thousand What indicators are important for lifetime value? LTV is a powerful indicator, but, like any metric, it has to be analyzed in context. This means comparing the data collected with other relevant metrics. This comparison helps to complete the puzzle that shows the real and complete situation of the business, that is, it shows what is working well and what needs more attention to improve. Look at some more important metrics to evaluate along with lifetime value: Churn Rate The churn rate measures how many people cancel the product each month. The higher that indicator is, the worse your LTV will be.
The value is payment per month, so the average number of Phone Number List transactions per customer throughout the year will be 12 (1 per month). Finally, let's say the average length of relationship (from purchase to end of relationship) is 3 years. The formula with these numbers would leave the calculation like this: LTV= 400 (average ticket) x 12 (number of purchases per year) x 3 (contract duration) LTV= ($400.00 X 12) X 3 LTV= $4.8 thousand x 3 LTV= $14.4 thousand In this case, the lifetime value of your clients would be $14.4 thousand. This would be the total value invested by a customer in your company. If the retention time were less than one year, it would only be necessary to multiply the average ticket by the total number of purchases.
For example: If the contract period here were 10 months, the bill would be just: LTV= $400.00 X 10 LTV= $4 thousand What indicators are important for lifetime value? LTV is a powerful indicator, but, like any metric, it has to be analyzed in context. This means comparing the data collected with other relevant metrics. This comparison helps to complete the puzzle that shows the real and complete situation of the business, that is, it shows what is working well and what needs more attention to improve. Look at some more important metrics to evaluate along with lifetime value: Churn Rate The churn rate measures how many people cancel the product each month. The higher that indicator is, the worse your LTV will be.