LTV Definition

Customer Lifetime Value (LTV) is the estimated value (generally monetary) that customers typically bring before ending their usage of your product

Customer Lifetime Value (LTV) is an esimation of the average total value generated by customers (users) over the entire usage of your products. Obviously, this is impacted by two things:

  1. The average length of usage
  2. The value generated by users whilst they are using your product

To increase LTV, either but ideally both of those metrics should be increased. You’ll want to focus on having longer term relationships with users who are providing more value to you.

Help, my LTV is going down!

When tracking LTV over time, any decrease could also be a result of either of the underlying metrics changing in a negative way. Are customers churning more? If so, look to change your proposition to make the product stickier for your target market. Are users generating less value? Perhaps look to increase additional services or make existing services more tightly integrated to raise the average spend per user per month.

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