Why is Lifetime Value important?

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For every entrepreneur, it is clear that knowing the values ​​of your customers' spending with the company is essential for greater organization of profits.

However, this knowledge also helps to imp Chinese Overseas Asia Number Data rove other fundamental aspects of a business, such as:

Know what to expect in the subsequent months according to LTV history;
Find possibilities that were not previously taken advantage of and work on retention;
Better manage the company's operations, both financially and in marketing and sales;
Find errors that could be avoided and that encourage customer withdrawal;
Make more assertive decisions.
Always being attentive and analyzing this database is a differentiator for any business within the job market today.

What are the essential indicators for Lifetime Value?
To be able to reach the correct Lifetime Value value for your company, it is necessary to adopt some specific key indicators for business analysis. See what they are:

Churn rate
Churn rate is your customer's abandonment rate over the months.

Normally, it is calculated each month to establish an assertive percentage. If the churn rate is high, it means that the Lifetime Value is low.

In this case, it is worth investigating the reason for so many cancellations and using the resources available to improve this rate and avoid cancellations.

Customer Acquisition Cost (CAC)
The customer acquisition cost results in the amount the company spends to close the contract for each sale.

The sectors highlighted in this calculation are marketing teams and sales personnel.

In this indicator, the values ​​need to be inverted: the lower the CAC, the better it is for LTV.

These values, when inverted, demonstrate a serious flaw in the financial health of any company.



Precisely for this reason it is important to calculate the CAC with a certain frequency so as not to miss sudden movements that may occur.

Average ticket
The average ticket is calculated to result in the average value of each sale per customer of the organization.

In other words, the total revenue value is divided by the amount of sales in the period.

This value must grow along with the LTV to represent robust financial health.