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You have completed Introduction to Churn and Lifetime Value (LTV) Analysis!
You have completed Introduction to Churn and Lifetime Value (LTV) Analysis!
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Most LTV calculations are a forecast.
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In an earlier video, we discussed
how LTV is essentially a forecast
0:00
of the value a customer will
bring us over their lifetime.
0:05
In the example we shared earlier,
a customer that pays us $10 a month,
0:09
signing up today.
0:13
On a product that has average
monthly gross turn of 20% will
0:15
have a $50 LTV before factoring in costs.
0:19
As with all forecasts or
0:23
predictions, sometimes things
don't play out as expected.
0:25
Perhaps a new product enters the market,
a recession hits, who knows?
0:29
Because we are projecting LTV for
a customer we just acquired today.
0:34
Based on metrics derived
from historical cohorts,
0:38
we need to monitor the metrics
that are inputs to LTV.
0:41
How often we do this depends on A,
0:45
how sophisticated our business
information and data systems are.
0:47
And B,
how rapidly our business is changing.
0:51
Also, what if our customer
lifetime is 36 months?
0:55
We are making customer acquisition
cost goals based on an LTV
0:59
that pays back over a long period of time.
1:03
That could potentially be too long,
depending on how much cash we have.
1:06
We'll soon introduce a measure of
LTV that can help control for that.
1:10
But first, we need to introduce
a specific type of chart or
1:15
report known as a cohort report.
1:19
If you already know what cohort reporting
is, feel free to speed up the next video
1:22
or skip ahead directly to
the video on realized LTV.
1:26
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