LTV is "a forecast of net profit resulting from the entire

darah16204

Relationship with the customer, including the future." Basically, it's how much profit you can make from a customer over their lifetime. It is important to evaluate your most important customers on a lifetime basis. You need to understand how valuable that customer will be in the long run. For example, let's say three customers sign up for a $50/month subscription product at the same time. One continued the service for one month, the second for three months, and the third for two years. Although the joining fee is the same at $50, there is a big difference in LTV. The prices are $50, $150, and $1,200, respectively. Not all customers provide the same value to a business. Therefore, it would be better if you could predict customers with high LTV early on. However, measuring LTV is extremely difficult . Only about 40% of companies are able to measure the value of customer failure . The only way is to collect information, assemble it into a predictive model, and use the extracted data to predict customer behavior. What is the formula for calculating customer lifetime value? The method of calculating LTV differs depending on the business content.

Here, we will introduce a typical calculation method for SaaS LTV. (MRR stands for Monthly Recurring Revenue, meaning monthly recurring income) ( Image source ) Customers who buy directly from you are naturally valuable , but these customers also help drive revenue through other actions. Indirect marketing, such Belgium Phone Number Data as word of mouth and referrals, is one example. Tracking these characteristics and behaviors such as site visits is the most effective way to model LTV. Why are these formulas important? The primary value of these formulas is that they give marketers an idea of ​​where to spend their budget and how much it will cost to acquire a customer. Marketing becomes easier by prioritizing and focusing on reaching high-value buyers. Also, by knowing the long-term revenue from a specific customer, you can determine whether you can offer discounts, set prices in advance, or drive customers to your page while still being profitable. can do.




By measuring the right metrics and working to improve them, you can develop a strategy to get back the money you spend and even increase your profits. Modeling LTV How can I predict LTV when acquiring customers? This is extremely difficult. Remarks by Wharton School Marketing Professor Peter Fader “When acquiring new customers, it is difficult to accurately calculate their LTV because there is little data about their transactions. However, some useful information is included in the acquisition process. Examples include acquisition channels, funnel and campaign information, and information about the initial transaction itself (products purchased, amount paid, discounts used), etc. If you look for customers with these characteristics among the customers you have dealt with in the past, you should be able to understand their LTV.