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How to Determine Life Time Value

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Information about How to Determine Life Time Value
Marketing

Published on March 7, 2014

Author: amitaisasson9

Source: slideshare.net

Description

People always ask me how to calculate Life Time Value of a customer segment.

The truth is that there are many ways to calculate this. It depends on your business model and recency and rate of repeat orders.
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LTV Inputs Segment 50,000   Year 3 Year 4 Year 5   Year 2 Year 1     $78.00         Retention Rate 20% 8% 5% 3% 2% Orders per Year 1.39 1.46 1.50 1.42 1.57 Average Order $208.82 $239.85 60% 59% Acquisition Cost Gross Profit $265.28 $215.59 $242.38 62% 60% 58%

LTV Results Total Customers Revenue per Customer Gross Profit per Customer LTV per Customer Year 2                   50,000                    10,000  $290.26 $350.18 $397.92 $306.14 $380.54 $174.16 $206.61 $246.71 $183.68 $220.71 Year 1   Year 1 Year 3 Year 4 Year 5 Year 2 Year 3 Year 4 Year 5 $174.16 $215.48 $235.21 $244.40 $251.02                                                                4,000  2,500  1,500 

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