CAC and LTV are essential indicators for the growth of your business. They allow you to identify how much your company is earning, indicating specific errors that need to be corrected and pointing out trends and opportunities. In addition, they are essential for maintaining the financial health of your company.
After all, achieving sustainable and long-lasting growth is every entrepreneur's dream. Therefore, dealing with metrics and performance indicators is essential to achieving this goal.
But do you know what these acronyms, CAC and LTV, stand for, and why they are so important to your organization? No? Then stay with us, as we will talk all about these metrics in today's post!
What is Lifetime Value (LTV)?
Lifetime Value (LTV) is a marketing gambling data china sales metric that estimates the potential future revenue and profit generated by a customer. This calculation takes into account the value and recurrence of purchases, including derived products and services.
In other words, it identifies the value that each customer left in your company over the period in which they consumed your products and services. The analysis of this data requires special attention to the type of business. Low-value goods that are used repeatedly tend to generate customers who return frequently, while high-value goods are more sporadic purchases, at least for most people.
Imagine that one of your customers made 4 purchases over the course of 2 years, and then never bought anything again. Each purchase had a different value: the first was R$60.00, the second was R$200.00, the third was R$225.00, and the last was R$40.00. Therefore, you could say that this person's Lifetime Value (or LTV) was R$525.00, which is the total sum of the amounts spent by him/her during the entire period that he/she was a customer.