Post 4: Customer Lifetime Value (LTV)

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 Post 4: Customer Lifetime Value (LTV)


🎰 Welcome back to my series on online casino metrics! 🎰


Today, we'll explore another crucial metric that helps evaluate the long-term profitability of your customers – LTV (Lifetime Value).


📊 Customer Lifetime Value (LTV)


What is it?


LTV measures the total revenue a single customer generates throughout their interaction with the casino. It's a key metric for understanding the long-term value of each user.


How to calculate it?


Formula:

LTV = ARPU × Average Customer Lifespan


How to calculate the average customer lifespan?


Formula:

Average Customer Lifespan = 1 / Churn Rate


How to calculate the churn rate?


Formula:

Churn Rate = (Number of Customers Lost During Period / Total Customers at Start of Period) × 100%


Example:


1. Calculating the churn rate:


Assume you started the month with 10,000 customers, and by the end of the month, you lost 500 customers.


Churn Rate = (500 / 10,000) × 100% = 5%


2. Calculating the average customer lifespan:


With a monthly churn rate of 5% (0.05), the average customer lifespan would be:


Average Customer Lifespan = 1 / 0.05 = 20 months


3. Calculating LTV:


In the previous post, we determined that ARPU (Average Revenue Per User) is €30. If the average customer lifespan is 20 months, then LTV would be:


LTV = 30 × 20 = €600


This means each customer generates an average of €600 over their entire relationship with the casino.


Why is it important?


LTV helps you understand the revenue you can expect from each customer, allowing you to plan marketing budgets and retention strategies. A high LTV indicates high profitability and strong long-term relationships with customers.


🚀 Conclusion:


LTV is a vital metric for assessing the long-term value of your customers. It helps in planning marketing and operational strategies to maximize revenue and user retention.


🔜 Stay tuned for more posts! In the next post, we will explore other key metrics that will help you better understand and manage your online casino.


#iGaming #CasinoMetrics #LTV #OnlineCasino #GamingIndustry #CustomerValue #RevenueGrowth #PlayerRetention #BusinessAnalytics #DataDrivenDecisions #GamingInsights

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