What is LTV?
LTV, also known as CLTV stands for Customer Lifetime Value. This is an estimate of how much money we can reasonably expect a single customer to spend at a particular company over the length of their relationship with the company.
This number does not only indicate how much we should spend on acquiring new customers, but it also guides us to know which segments of the market are most lucrative to pursue.
How do you calculate your LTV?
Purchase Frequency x Average Order Value x Average Customer Lifespan – (Acquisition Cost + Retention Cost)https://www.clickz.com/how-to-calculate-customer-lifetime-value-cltv-the-complete-guide/228128/
In case of emergency:
If no one knows your LTV & you really are unable to calculate it, err on the side of caution and assume that it is “bad (less than 4x your current CAC)”. Moving forward you will want to track this each month so that you know if you are hemorrhaging money due to a broken customer journey, poor performing customer support protocol or an error in the product or service that you are offering.
The relationship between LTV & SEO
As better content, product refinement, product diversification and / or customer care leads more of your current customers to stick around and spend more money with your company, your LTV will increase.
If you’ve ever heard of large companies having a 12 person team just working on SEO, it is because SEO initiatives such as press coverage and SERP 1 content not only drive your CAC down, but can increase your GCR and LTV.
How does Molo9™ use LTV?
Molo9™ crosses your current LTV with your company’s unique attributes to find the best ways to increase your LTV.