What is the term Life Time Value (LTV)?

Nowadays, we find ourselves with much more competition when it comes to advertising on any channel, so acquiring a new client is more expensive on any platform or it is more difficult to convince them that our proposal is better.

Therefore, we tend to improve and increase the customers who already buy from us (when we talk about recurring consumer products).

In this way, of course, we highlight its basic definition so that it is clear to us and we can engrave it in our heads simply and easily, remember: “customer lifetime value”. 

It consists of two main metrics: the current value of the customer India Mobile Database and the potential value that a customer can have for a company. In this way, another KPI appears to take into account when working on this exercise: CLV , the profit margin that a customer contributes to the company throughout their life.

Our goal here is to build a solid relationship with a client over time, since, nowadays, it is more beneficial than attracting new clients.

And… How is it calculated?

There are various valid calculation formulas, but so that we understand them and gradually get to grips with these new concepts, we propose the simplest one:

LTV=Average Spending x Acquisition Recurrence x Customer Life (number of years that they are our customer).

Additionally, we add another concept linked to LTV to have a more complete vision and to be able to analyze it when making decisions, the CAC (Customer Acquisition Cost), the result of the sum of the investments made in marketing and sales divided by the number of customers gained in a given period. Here is its formula:

CAC = (Marketing Investments + Sales Investments) ÷ Customers gained

Please note! For the CAC calculation to be accurate, we must take into account only the number of customers acquired from marketing  Cambodia Phone Number List and sales actions, and not the total number of new customers in the period.

Another important fact

The cost of acquiring a customer (CAC) should be lower thme value (LTV), since it   would cost us less to acquire a customer than what we get from them.

If you have any questions or want more information, you know where to go:, your digital marketing agency !