WHATS IS CUSTOMER LTV LIFETIME VALUE AND HOW TO CALCULATE IT

Find below the the meaning and definition of customer lifetime value in marketing and how to calculate it. Brought to you by MAU. Digital Marketing Specialist at eDigital

WHATS IS CUSTOMER LTV LIFETIME VALUE AND HOW TO CALCULATE IT

There are many ways to calculate Marketing LTV, but a model that is tailored to the specifics of your sales cycle will be most effective.

LTV is important because it helps marketers calculate their Marketing ROI over time.

Here is the formula to calculate LTV:

LTV = (Average Margin per Order x Repeat Sales Frequency x Average Retention Time)

Example: $300 = ($100 x 0.5 purchases per month x 6 months) Lifetime value is $300.

Here is the formula to calculate ROI:

ROI = (LTV-CPA)

Example: Use these values: LTV = $300 (calculated above) CPA = $50 (what we pay to “buy” high-quality customers) ROI = ($300-$50) Overall ROI is $250, a 400% increase on the CPA.

By gaining a deep understanding of the LTV of your average customer and using that to determine how much to spend to get them to convert, you can get a more accurate sense of what your Marketing ROI is.

WHATS IS CUSTOMER LTV LIFETIME VALUE AND HOW TO CALCULATE IT

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MAU. award winning digital marketing specialist at eDigital Agency

Award Winner Digital Marketer, top Linkedin Influencer, Certified Facebook / Adwords Professional, Certified SEO Consultant, StartUp Investor, Writer, Speaker. 15+ years optimising some of Australia’s top brands. MAU.trains marketers via Strategy Workshops & Training Sessions inc his popular Digital Marketing Plan & Social Media Plan templates. MAU. enjoys football, latin music & hiking while teaching Digital Marketing or completing creative photography briefs and conceptual photography assignments. Subscribe to MAU.’s e-newsletter connect on LinkedIn Instagram Facebook

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By |February 11th, 2019|Marketing Strategy|