What is and How to Calculate the Lifetime Value?

The translation of the English term “lifetime value” or LVT is “life value” and can be easily understood when we place it in the correct context. This metric estimates the liquid profit of the life of a client within the company.  What is the value of a customer? At first glance, this question may seem impossible to answer. After all, no business survives without customers and only those who are entrepreneurs know the effort required to get each one of them. But, digital tools have changed the way business is done, and one of the reasons is the possibility of measuring almost everything in a marketing and sales strategy. Among the elements that you can (and should) know well is the lifetime value – which answers the question that started this article.

What is Lifetime Value?

The translation of the english term “Lifetime value” or lvt is life. Value and can be easily understood when we place it in the proper context. This metric estimates the net lifetime profit of a customer within the company. The lifetime value of a customer refers to how much money. He Netherland phone number will offer to your company during the entire time of the relationship. With your brand. Wait to? Well, let’s give an example to make. It easier to understand the question: imagine that one of your customers. Made four purchases in two years, and then never bought anything again. Each purchase had a different value. The first was $25.00; the second for $100.00. The third $120.00; and the last one for $80.00. Thus, you could say that the lifetime value, or ltv.

Why is This Indicator Essential for the Health of Your Business?

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It doesn’t take much thought to understand how essential LTV is to the health of your business. Knowing precisely how much money, approximately, customers spend and for how long they use your product or service can help you: Define the maximum marketing budget so as not to spend too much on the acquisition and lose money in the long run; CG Leads Know how many prescriptions you can expect for the next few months, based on the sales history and the LTV; Find specific failures that lead customers to discontinue service early; YFind underutilized opportunities to improve acquisition and retention. In other words, calculating and monitoring the lifetime value is essential to make better management and marketing decisions.

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