Calculating LTV involves several steps and various metrics:
Average Purchase Value: Calculate this by dividing your company's total revenue over a period by the number of purchases during that period. Average Purchase Frequency Rate: Determine this by dividing the number of purchases by the number of unique customers who made purchases during that period. Customer Value: Multiply the average purchase value by the average purchase frequency rate. Average Customer Lifespan: This is the average number of years a customer continues to purchase from your company. LTV Calculation: Finally, multiply the customer value by the average customer lifespan to get the LTV.