What is life time value? How can app developers benefit from understanding they're users LTV?
What is LTV?
LTV - Life Time Value is the ratio between the cost of a new user and the revenue this user generates on your app over time.
An average of all users, over the lifetime of the app-user relationship.
Why does LTV matter? As app developers, we want to make data-driven decisions about our marketing strategies. Understanding the LTV of our users helps us make smart decisions about how much money we should spend to acquire new users.
Now, calculating LTV is pretty simple. Let us break it down for you.
Lifetime User Revenue — Lifetime user cost (UA, Manage) = LTV
Take the lifetime revenue generated by a user and subtract the lifetime costs of acquiring and managing that user. That's your LTV.
For example,
A user makes an in-app purchase with 100$, the cost of this user is 20$ in total so the LTV is 80$ Over a lifetime period which is not a real lifetime but the average time a user uses the app.
So what can you do with this LTV information? Well, once you know the LTV of your users, you can make more informed decisions about how much money you're willing to spend to acquire new users. Plus, you can use LTV as a benchmark for how long it will take to see a return on investment or ad spend.
Overall, understanding LTV is crucial for app developers who want to make data-driven marketing decisions. It helps you determine the right amount of money to spend on acquiring new users and gives you a benchmark for measuring success.
So don't miss out on this opportunity to optimize your marketing strategies! Knowing your app's LTV is key to making data-driven decisions, and if you need a hand with it, just hit up SDM GROWTH.
We can not only help you calculate your LTV but also develop a winning marketing plan for your app. Drop us a message at [email protected] to get started today.
By the way, the first consultation is on us!
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Yogev Hevron July 15, 2023
