LTV Calculations – Five Element Analytics
December 1, 2017

LTV Calculations

Lifetime Value (LTV), sometimes referred to as Customer Lifetime Value (CLTV), is a technique used by businesses to predict the net profit of the entire future relationship with a customer. LTV is best thought of at a high-level as simply Total Customer Revenue – Total Customer Costs. While the ability to predict value at the customer level is important on its own, LTV predictions become even more powerful when used to analyze and obtain insights on your entire customer base as a whole.

Working with a large media client, our analysis were able to predict LTV for marketing campaigns within hours of launch, with an accuracy of over 90% for many campaigns. This capability increased the effectiveness of our client’s marketing campaign by over 50%, saving them millions of dollars in campaign related costs over two years, but more importantly increasing their revenue on the campaigns by over 30%.

 

<blockquote class=”alignright”>Improving an LTV model with powerful data analytics enable you to estimate marketing costs better, analyze customer acquisition/retention/expansion strategies, and improve products and business operations. </blockquote>