LTV (from Lifetime Value) is the amount of profit that an individual customer will bring in over the entire period of interaction with the brand: from the first acquaintance to the last purchase. The metric shows the benefits for the company from retaining the audience. If the costs of working with regular customers exceed the total income, then it is worth revising the marketing strategy.
What is LTV metric in marketing
The lifetime value of a customer is more india phone number list than just the money they spend on goods or services. It also takes into account the company’s indirect profit from cooperation with the client. This is especially important for the service sector, information business and education.
For example, a person subscribed to the newsletters of a foreign language school. He uses free materials, publishes reviews and talks about the company on social networks. As a result, new clients come to the company, who purchase paid courses. Profit can be taken into account as the LTV of the first subscriber: it was he who started the chain of reviews and reduced the school’s advertising costs.
Determining the value of individual customers allows you to make the brand’s work “transparent”. You do not just say: “We value every client,” but prove it in numbers. For example, you can name the income from a specific category of consumers.
Why Calculate LTV: Benefits for Business
The customer lifetime value indicator jessica en blanco must be calculated for any business. It shows how much the company’s costs of retaining customers pay off. With it, you are confident in the correctness of the chosen marketing tools and understand which segment of the audience is more correct to invest money in. And the question: “How much are you willing to spend on attracting customers?” will not baffle you.
What do companies focus on when assessing the effectiveness of marketing? The main metrics are return on investment (ROI) and cost per lead (CPL). But they will not help to get a general idea of the state of affairs of the company. So the first indicator will answer the question: “Have the advertising costs from the client’s first purchase paid off?” The second will show how much you spent on receiving applications from the audience for each of the marketing activities.
Why is this data not enough for a full analysis of the company’s work? They estimate the company’s income at the current moment. These values do not provide forecasts regarding the future behavior of customers. But it is the long-term behavior saudi data of consumers that is the basis for the functioning of the business.