LTV Modelling

Understanding the lifetime value (LTV) of users is incredibly important once the app is monetizing.  LTV is a Present Value calculation of the future expected revenue generated by a user over their lifetime.  Since this is a forward-facing projection, LTV modeling is not an exact science; actual revenue generated by users may exceed or underperform the LTV calculation and as such it pays to be conservative when using LTV for advertising-buying decisions.  LTV can be influenced by many factors including acquisition source, user demographics, range of monetization possibilities within the product, etc.  If user retention (lifetime) can be increased, it follows that LTV will be higher too.

Resources:

  • http://www.slideshare.net/EricSeufert/ltv-spreadsheet-models-eric-seufert
  • http://www.apptamin.com/blog/lifetime-value-mobile-customer/

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