Do you ever find out, which is the powerful tool or metrics which tells the worth of consumer through convenient channels? If you are scratching your head, then no need to worry about it.
In this article, we will discuss the lifetime value, which is a handy tool for the mobile app marketing budget. It allows you to apprehend the customer volubility and how can you attract that customer towards your platform.
What is the lifetime value (LTV)?
The lifetime value (LTV) or user lifetime value is the overall estimation that you can calculate or expect from a buyer individual purchase over some time when he first uses the app. Hence, the amount of money or the transactions which are carried out between the periods, when he/she is using the app, includes small, medium, and extensive buying and subscriptions. Therefore, if we put in a nutshell, it includes all the activity from start to end, when the user is using the app.
An explanatory blog post about LTV
How is LTV measuring?
There is no such rocket science in calculating the LTV measuring. First, we’ll begin with the average purchase which is equal to the total revenue generated divided by the total number of purchases.
Average purchase value formula:
Average purchase value = Total revenue / Total number of purchases
Average purchase frequency rate formula:
Average purchase frequency = the Total number of purchases / No of new customers.
User value formula:
User value = Average purchase frequency x Average purchase value.
LTV formula:
LTV = User value x Average user lifespan
Return or Investment (ROI):
ROI = LTV / CPI
Why Is LTV Important?
It is understandable, due to various mobile marketing calculations, you might be wondering that it helps in app success. But, the real question lies between it, that is, what makes LTV so important?
The reasons are listed below:
- It gives a transparent and precise look over our spendings and helps us to invest in those consumers who are willing to get evolved and engaged with the brand.
- It extends the fundamental value of each user to a broader side. With the ability to offer retention, monetization, and virality. These are the foremost and valuable pillars in bringing new consumers to your application.
- The final reason is, it helps the tracking of users effortlessly. It tracks consumers with help of their age, income, and the activity they are interested in it. Moreover, these sorts of tracking further help users to avail discounted subscriptions, and in a return, these steps would be very healthier for your app marketing and planning.
How Is LTV Increase?
There are various methods through which companies grow LTV increase, depending on the order, rates, and selling of products. Therefore, there are three steps through which you can easily increase the LTV. First is purchase frequency, which satisfies consumers and makes them able to shop more. Second, retention, which helps the product to grow furthermore and the last, not the least is profit margins.
