There are various methods to calculate LTV, but a common formula is: LTV = (Average Purchase Value) x (Average Purchase Frequency Rate) x (Customer Lifespan) Here's a breakdown:
Average Purchase Value: Total revenue divided by the number of purchases over a period. Average Purchase Frequency Rate: Number of purchases divided by the number of unique customers over a period. Customer Lifespan: The average duration a customer continues to purchase from the business.