How to calculate the lifetime value of a customer

You might be thinking, what the heck is customer “LTV”? It sounds like an off road vehicle you might take to the sand dunes in Mexico, or some fancy double agent acronym! But it's not, lifetime value is actually a very important number that every business owner should know.

LTV stands for “lifetime value” of a customer. Every business has a slightly different LTV, some businesses only sell a product once or twice in a lifetime. Others sell products on a daily, weekly, or monthly basis.

Starbucks sells a cup of coffee for $5 dollars, but they sell it 4-5 times per week to the same customer. Lamborghini sells $200,000 exotic cars, but they are lucky to sell it more than once or twice to the same customer in a lifetime.

Calculating your LTV is pretty simple actually once you know how to do it. Thats why we created this awesome lifetime value infographic that explains how to calculate customer lifetime value.

Just follow the steps and you should have a pretty accurate LTV. You might be surprised, many of our customers spend a lot more on new customer acquisition after doing this simple calculation.

The other added benefit is learning what you should spend on Google AdWords, Facebook Ads, and Search Engine Optimization.

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Read more> How to improve your social engagement

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We can help you determine your customer LTV and manage your advertising campaigns better to make sure you reach a positive ROI.

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Posted on September 2, 2015 in Advertising, Marketing

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