LTV specifics, pitfalls and life hacks. WHY YOU NEED TO KNOW LTV AND HOW TO USE IT CALCULATE LTV? EASY! OPTION 1: ARPDAU * LIFETIME CUMULATIVE ARPU HOW TO CALCULATE LTV FOR SUBSCRIPTIONS HOW TO OPTIMIZE LTV devtodev.com

1. LTV
specifics, pitfalls and life hacks
VASILIY SABIROV
LEAD ANALYST & CO-FOUNDER
DEVTODEV

2. WHY YOU NEED TO KNOW LTV
AND HOW TO USE IT
▨ LTV (CLV) is the average money from one user
during the whole lifetime
▨ LTV > CPI (it is believed that SaaS will be attractive
to an investor if its LTV > 3*CPI)
▨ Segment LTV by sources
▨ LTV -> ROI
ROI = LTV / CPI * 100%
ROI N days = Cumulative ARPU N days / CPI * 100%

3. WHY YOU NEED TO
KNOW LTV AND HOW
TO USE IT
▨ Calculate the payback period
▨ Plan expenditures
◍ LTV > CPI
○ LTV -> ‘clean’ LTV
○ CPI -> eCPI
○ expenses per user
○ ‘clean’ LTV > eCPI + expenses
per user

4. WHY YOU NEED TO
KNOW LTV AND HOW
TO USE IT
▨ LTV is the main qualitative metric
▨ Project dynamics
LTV = f1(retention, ARPU)
ARPU = f2 (paying share, ARPPU)
LTV = F(retention, paying share, ARPPU)

5. WHY YOU NEED TO KNOW LTV
AND HOW TO USE IT
▨ To forecast future revenue
◍ What will happen to revenue in 3 months if we
decrease paid traffic by 50%?
◍ If we open a new market in April, how much money
will we get by the end of the year?
◍ If we make a change that will increase retention by 3%,
how will it influence revenue?
◍ When will the traffic bought from the partner X pay
off?

7. ▨ close registrations
▨ wait until all users “die out”
▨ divide total audience by total revenue
▨ PROFIT
IDEAL METHOD
source

8. ADVANTAGE
▨ No one will do it this way▨ Ideal value
DISADVANTAGE
_+

9. ▨ calculate total revenue for the whole period
▨ calculate total unique users for the whole
period
▨ divide one by another
DIVIDE EVERYTHING

10. ▨ LTV ~ Total Revenue / YAU
▨ LTV ~ $501050/14550 = $34,44
▨ pretty rough estimation
CASE

11. ADVANTAGE
▨ inaccuracy
▨ doesn’t consider the project’s dynamics. You can get only one
value for the whole period
▨ underestimates the contribution of current users
▨ one operation
DISADVANTAGES
_
+

12. LIFETIME = average time from install date to
the date of inactivity
▨ Define an inactivity period (a week, 2
weeks, a month, etc.)
▨ Check inactive users every day
▨ Calculate the average period from
registration to last activity
▨ This is lifetime
OPTION 1:
ARPDAU * LIFETIME

13. ▨ mark churned users
▨ calculate their lifetime
▨ average their value
▨ (12 + 29 + 3) / 3 = 44 / 3 = 14,7 days
CASE

14. ADVANTAGE
▨ ARPU never changes?
▨ lifetime fluctuations
▨ lifetime is taken from the past (inactive users), ARPDAU is
calculated considering the current date - all of this is used to
calculate the future!
▨ one operation
DISADVANTAGES
_
+

15. LIFETIME = integral (retention)
▨ integral can be substituted with the sum
▨ it can be calculated in solver (non-linear
optimization)
OPTION 2:
ARPDAU * LIFETIME

19. ▨ how many days to sum up
◍ expert evaluation
◍ minimum increment
◍ discounting
ARPDAU * LIFETIME
source

20. ADVANTAGE
▨ ARPU never changes?
▨ lifetime is taken from the past (inactive users), ARPDAU is
calculated considering the current date - all of this is used to
calculate the future!
▨ we also get retention forecast
DISADVANTAGES:
_
+

21. LIFETIME = integral (retention)
▨ LTV - max. cumulative ARPU when t -> ∞
▨ how many days to sum up
◍ expert evaluation
◍ minimum increment
◍ discounting
CUMULATIVE
ARPU

23. ADVANTAGES
▨ no quick results
▨ a longer period is more accurate (but we need
it quickly)
▨ calculates LTV based on a definition
▨ accuracy
DISADVANTAGES
_+

24. HOW TO CALCULATE LTV
FOR SUBSCRIPTIONS
▨ lifetime - number of subscription periods (months)
▨ Churn - % of users who didn’t prolongate
▨ LTV - average value from one subscriber

25. CALCULATION
METHODS
▨ LT = N(subscriptions) for the whole
period / N (subscribers)
▨ LT = 1/CR
▨ LT = (1 - CRr)^s * (s + 1/CRp)
r - short-term CR
p - long-term CR
s - number of months in short-term
▨ LTV = SubscriptionPrice * LT
CR 1 = (100-70)/100 = 30%
CR 2 = (70-50)/70 = 29%
CR 3 = (50-40)/50 = 20%
CR 4 = (40-35)/40 = 13%
CR 5 = (35-30)/35 = 14%
CR 6 = (30-25)/30 = 17%

26. SOME DETAILS
▨ Payback period
▨ Segmentation
▨ LTV decreases over time if you do
nothing
▨ Social LTV = LTV * (1 + k-factor)

27. TO SUM UP
▨ ideal method
▨ lifetime * ARPU (by churn)
▨ lifetime * ARPU (by retention)
▨ cumulative ARPU
▨ subscription

28. HOW TO OPTIMIZE LTV
LTV = F (retention, ARPU) = F (retention, ARPPU, paying share)
retention
▨ tutorial
▨ transparency
▨ intrigue
▨ cycles
▨ triggers
paying share
▨ paying and non-
paying balance
▨ loyalty
▨ long-term retention
ARPPU
▨ value for users
▨ product line
▨ long-term retention

29. THANK
YOU
FOR YOUR
ATTENTION
&
RETENTION!
sabirov@devtodev.com
www.devtodev.com