Do you know the long-term value of your customers? Use our lifetime value (LTV) spreadsheet to calculate and estimate the future value of your customers and set more realistic investment levels for marketing budgets in customer acquisition programmes.
Lifetime value models have many applications, but they are most powerful as a tool to help businesses prove the future value they can generate from marketing campaign activities.
It’s much better evaluating investment based on long-term returns from marketing activities rather than the short-term success of a single sale.
Lifetime value analysis will help you plan and measure investment levels for customer acquisition programmes. As you’ll know, every new campaign should have a clear target cost for allowable customer acquisition (CPA). If you’re making the business case to your boss or colleagues in finance or investors they help give you project numbers to back up your arguments for more investment.
LTV models are important for many different times of businesses like retail, utilities, travel or web services like software services or publishing where there will be recurring revenue. They are also important to creating business plans and forecasts for startup businesses to help estimate future revenue.
Read through the ‘Read Me’ tab first. Then go to the ‘Lifetime Value Model’ tab, edit the table with data for your business to calculate LTV. When you input your data into the blue cells, the orange cells will automatically update.
The rows in the spreadsheet model are:
Dr. Dave Chaffey
Dave is co-founder of Smart Insights and creator of the Smart Insights RACE planning framework. For his full profile, or to connect on LinkedIn or other social networks, see the About Dave Chaffey profile page on Smart Insights. Dave is author of 5 bestselling books on digital marketing including Digital Marketing Excellence and Digital Marketing: Strategy, Implementation and Practice. In 2004 he was recognized by the Chartered Institute of Marketing as one of 50 marketing ‘gurus’ worldwide who have helped shape the future of marketing.
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