The (almost) magic formula of Lifetime Value estimation

In a previous blog post, Reinier wrote about the importance of assessing LTV. He brings as an example a corporate case study, and says “It’s not the calculation that is so interesting […]What is most interesting is that this infograpic underlines the importance of using Lifetime Value (LTV) in your acquisition strategy.”

And he is right for 2 reasons:

First of all because every organization has his own needs, and an approach based on a “one size fits all” formula wouldn’t last long;
But also because the calculations used in that particular case study are not reliable! (I will not go into details here, I explained the reasons of my perplexity in the comments.)

The truth is that, sooner or later, we need to look at the math of LTV as well. (more…)