What’s the Value of a Customer?
LTV is an important metric in understanding the present value of a typical customer. The more data that you can consistently collect and add to the calculator, the more accurate your results will be. Try to use the calculator to consider different channels or acquisition or different segments of customers to determine which combinations help you maximize your profits.
Your LTV is the present value of all of the future cash flows (profits) that a typical customer will generate over a lifetime of doing business with you, discounted slightly, for the cost of capital, less your costs of acquisition.
Maximize Your Profit Rather Than Minimize Your Cost
Using your LTV strategy wisely, you can maximize your investment in acquiring the right customers, thus maximizing your profit, instead of just minimizing your cost. Maximizing the benefit of LTV will help you maximize your return on investment.