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The Most Important Metric in App Analytics: LTV

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The Most Important Metric in App Analytics: LTV

  1. 1. LTV The Most Important Metric In App Analytics And How To Calculate It!
  2. 2. Lifetime Value Lifetime Value, often shortened to LTV, is the measure of the revenue a customer will bring during their lifetime of using your application. Many, including 100% of the 60 developers we surveyed, say it is the most vital number you need to know about your business.
  3. 3. How Do I Calculate Lifetime Value?
  4. 4. The data Customer Churn: This is the rate at which you lose customers during a given period, normally measured monthly. It is the number of people who left your app, expressed as a percentage of the number of people who could have left. Average Revenue Per User: This is the revenue you generate, on average, from each user of your application. This can be calculated by adding up the revenue you generate each month, and dividing it by the total number of users.
  5. 5. The formula The formula for calculating LTV is pretty simple. It is:
  6. 6. An example - Data Aperture Apps has 1,000 users of its popular application. From advertising and selling some simple In-App Purchase items, it makes $500 per month. Each month it loses 300 users of its application from the pool of people who were using it the month before. With these numbers we can work out ARPU and Churn, and therefore calculate LTV. ARPU = Monthly Revenue from Users / Monthly Number of Users = $500 / 1,000 = $0.50 Churn = Percentage of people who could leave and did leave = 300 out of 1000 = 30% We can now pipe this data into our LTV formula.
  7. 7. An example - Formula If we pipe the information from the previous slide into the LTV formula, we get: Which shows us that we have an LTV of $1.67. It’s that easy!
  8. 8. $1.67 The lifetime value of an Aperture Apps customer.
  9. 9. Got a Question? Read more about LTV on the Tapdaq blog.

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