Although it is a metric closely related to finances, Lifetime Value directly affects other areas of your company, such as Marketing and Customer Service. Basically, LTV will tell you the effective cost you need to invest to keep a customer loyal.
Nowadays, it is much easier to measure okx database numbers, with the wide range of tools available to us. However, knowing the theory makes a big difference when it comes to analyzing and outlining the best strategy.
So we created basic content, but with all the necessary information for you to start measuring Lifetime Value without error.
Understanding Lifetime Value in Practice
Saying that Lifetime Value is the amount invested to keep a customer loyal may seem too broad, as each company is a very different universe.
So let’s explain the metric with a very practical example.
Imagine that you offer a subscription service, where the monthly fee is R$100 per month. Since the purchase is recurring, the average number of transactions per year is 12. Let’s also assume that this customer has stayed with your company for 5 years.
The formula for calculating LTV is:
LTV = (average ticket × average purchases per customer each year) × average relationship time
Therefore:
LTV = 100 (average ticket) x 12 (number of purchases per year) x 5 (contract duration)
LTV = R$ 6,000
But why is Lifetime Value important?
When you track customer value, among uniqlo marketing strategy things, you can set a spending limit to attract new customers without causing you losses. This way, you can direct your marketing, sales and loyalty initiatives to be more effective.
Calculating your customers’ LTV will bring benefits such as:
- helps you calculate investments and income over time. Using Lifetime Value, you can, for example, project results and know when to invest;
- optimizes your marketing budget, allowing you to understand whether you are spending too much or too little to keep customers in your base;
- more easily identifies flaws in the loyalty process;
- Consequently, Lifetime Value helps you identify new opportunities to retain that customer. You get to know more about their behavior and offer more resources to keep them loyal.
How to improve Lifetime Value?
If you have the problem at hand, you certainly want to understand what the best solutions are for these cases!
LTV can be improved through some strategic actions, such as:
Improve customer relationships
Remember at the beginning of the post when australia database directory said that LTV was also related to your company’s customer service? When you have a positive relationship with your customers, it’s much easier to retain them.
The recommended products and services are more personalized and you know exactly what delights your customers or consumers the most.
