Industry cases and commonly used 3 formulas

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LTV means Customer Lifetime Value ( LTV /CLV/CLTV). It is used by companies to measure the total revenue a brand obtains from customers in the long term. It is an important indicator of customer relationship management (CRM).

"Customer value" can be measured through a single or short-term transaction, but "customer lifetime value" can highlight a brand's performance in long-term customer relationship management and in-depth membership management . This article will gradually take you through how to calculate customer lifetime value (LTV), why it is important, as well as industry business tips and successful cases for improving customer lifetime value.

LTV/CLV 3 formulas for calculating customer lifetime value
Calculating the LTV of a single customer is relatively easy. Assuming that Xiao Wang bought 500 cups of Starbucks lattes in his seventy years of life, each cup cost 120 yuan, and did not make other russia whatsapp phone number purchases at Starbucks, then the customer lifetime value provided by Xiao Wang to Starbucks is 60,000 yuan (500 x 120) yuan. However, the reality is not that simple. According to a statistical report by Invesp , 76% of companies believe that LTV is an important indicator, but only 42% can accurately calculate customer lifetime value .

First of all, it is often difficult for brands to estimate the value that a customer can provide in a "lifetime", but can only estimate it over a period of time. Furthermore, brands usually do not only care about the LTV of a single consumer, but will further want to know the average LTV of all customers, or the average of a certain group of customers. Therefore, most brands use the following formula to estimate average customer lifetime value: