Optimizing for
LTV
Sharath Bulusu
LTVis simple
LTV
=
revenue per user per time
x
user lifetime
-
customer user cost
LTV
=
average revenue per user per time
x
expected user lifetime
-
average user acquisition cost
LTVis not simple
Averages are misleading
(and the preceding slide has 3 of them)
LTV
=
average revenue per user per time
x
expected user lifetime
-
average user acquisition cost
average revenue per user per time
• how many product / service categories do you
offer?
• do you attract different user ty...
expected user lifetime
• expected user lifetime is easy
• 1 / average churn rate
• are churn rates really constant?
average user acquisition cost
• easy. Marketing spend / total customers acquired
• or not.
• do you know your acquisition ...
some recommendations
• don’t fall for automated, generic reporting
• build your LTVreports the hard way
• understand your ...
what I didn’t talk about
• how much does it cost you to retain customers?
• what is your cost of capital?
• … and a lot mo...
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InMobi inDecode - Optimizing for LTV

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Sharath Bulusu, Head of Products at Myntra speaks about 'The criticality of Customer LTV' at inDecode meetup

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InMobi inDecode - Optimizing for LTV

  1. 1. Optimizing for LTV Sharath Bulusu
  2. 2. LTVis simple
  3. 3. LTV = revenue per user per time x user lifetime - customer user cost
  4. 4. LTV = average revenue per user per time x expected user lifetime - average user acquisition cost
  5. 5. LTVis not simple
  6. 6. Averages are misleading (and the preceding slide has 3 of them)
  7. 7. LTV = average revenue per user per time x expected user lifetime - average user acquisition cost
  8. 8. average revenue per user per time • how many product / service categories do you offer? • do you attract different user types in different seasons? • how much does purchase frequency, volume & value vary over time?
  9. 9. expected user lifetime • expected user lifetime is easy • 1 / average churn rate • are churn rates really constant?
  10. 10. average user acquisition cost • easy. Marketing spend / total customers acquired • or not. • do you know your acquisition cost by channel? • do you use channels that have varying seasonal cost? • how competitive are your most important channels?
  11. 11. some recommendations • don’t fall for automated, generic reporting • build your LTVreports the hard way • understand your acquisitions channels deeply • understand churn, acquisition stats by (time) cohort
  12. 12. what I didn’t talk about • how much does it cost you to retain customers? • what is your cost of capital? • … and a lot more

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