For example, you need to calculate LTV for an online store app. The average check is 2,000 rubles. You have regular customers, they come back twice a year, and your average Lifetime is 5 years.
Then LTV = 2000 × 2 × 5 = 20,000 rubles.
The main disadvantage of this method is the hypothetical Based on the results of nature of the data. You cannot be sure that the client will use the application for five years or that their average bill will not change.
However, the calculation using this formula is convenient to use to outline guidelines for the development of the application and the business as a whole.
Cohort analysis Based on the results of
To compare customer LTV across different periods, traffic sources, or products, you need to conduct a cohort analysis. It allows you to calculate this indicator for a separate group of users.
Cohort analysis will show which groups stay with the brand longer and which channels generate more active users.
For example:
- One group may consist of users who came after advertising Based on the results of in Telegram. Calculating LTV for this segment will help determine the effectiveness of such advertising in comparison with other promotion channels.
- Another group is those who purchased an annual subscription in the app. This will help compare their performance with those who purchase a subscription monthly.
- Another one is users who installed the application after the promotion. The analysis will help evaluate the effectiveness of the promotion and understand whether the costs were recouped.
Based on the results of cohort analysis, you can draw a fiji business email list conclusion about the effectiveness of channels, optimize advertising strategies and budgets, and develop a loyalty program. In addition, it allows you to create a portrait of the target client. Loyalty assessment, characteristics of different user groups will help you understand who makes purchases most often.
Cohort analysis is also useful when launching new versions of applications. It can be used to assess the level of user retention.
It is also used to optimize the sales cycle. For example, there is an application with trial periods, a trial version, and paid plans. If you analyze the LTV indicator of different cohorts, you can understand who switches to paid versions more often and which plans are chosen more.
How to Know if Your Business Has a Good LTVBased on the results of
There is no single standard for LTV. Each business key aspects of contextual advertising training will have its own optimal level of customer lifetime value.
You can compare LTV with CAC — the cost of attracting a client. It is believed that the following ratio would be good:
LTV ≥ 3 × CAC
This ratio was first proposed by David Skok after analyzing successful SaaS companies. However, it is not entirely clear how applicable it is to other types of businesses.
To estimate LTV, you shouldn’t look for a norm or rely on other people’s indicators. It’s better to track the dynamics of LTV in your company.
How to Increase LTV for Mobile Apps Based on the results of
To increase LTV, it is enough to improve one of the europe email main indicators – the average check, the frequency of purchases, or the customer’s lifetime in the application.
