![]() There are several ways to boost mobile app LTV, most of which involve bolstering user retention, or how long (and often) users engage with your app. You also now know that you should not be paying more than $3.29 to acquire a new user. 70) we arrive at the value of $3.29, or your average user lifetime value. Average order value x Number of repeat sales x Average retention time (in months)įor example, your average user generates $2.30 per month and you have a monthly churn rate of 70%.Average monthly revenue per customer / Monthly churn.Average monthly revenue per customer x Customer lifetime (in months).There are three ways to calculate LTV and arrive at a number you can use to accurately assign value to your users. Leveraging mobile app LTV represents the difference between doing surgery with a chainsaw versus a scalpel. In an industry where user churn and fragmentation are increasingly common, mobile marketers must remain focused and fiercely efficient. Significantly more likely to be successful in the long term.Generate sustained revenue growth over time.Retain more loyal users who are less likely to switch to a competitor.More likely to remain popular for longer periods of time.Skyrocketing acquisition costs combined with a mobile marketing landscape in a constant state of change make determining user value an unpredictable process.Ĭompanies that focus their marketing efforts on engaging and retaining high-quality users often see success in the following areas: The cost to acquire an in-app buyer, as of 2021, was at an average of $74.68 in North America. ![]() In fact, for many apps, an “install” is virtually meaningless without a substantial return. Accuracy + Relevance = SuccessĪccording to Statista, 48% of mobile marketers said that their biggest marketing challenge was that new app installs don’t equate to high lifetime value (LTV) users. Mobile app LTV should be the primary barometer for your mobile marketing budget because it effectively assigns weight to each and every user (or a user average), allowing marketers to identify the users most responsible for driving ROI. LTV solves this problem by telling you how much value a newly acquired user brings to your app – and by extension, gives you a cap for how much you should spend on acquisition costs. ![]() Now more than ever, as user churn continues to plague mobile apps with low retention and immediate uninstalls, measuring marketing success is far from cut and dry. Managing a marketing budget, as you all know, is a game stuck somewhere between balancing 1,000 spinning plates and hitting 1,000 moving targets. Why does user LTV matter? – A wholistic metric for wholistic decisions Virality – Your app’s “reach” or “shareability.” Simply put, virality describes how many new users your existing users will bring to your app.Retention – The rate that users revisit or re-engage with your app over a specific timeframe.Monetization – The amount of money a user contributes to your app revenue over their usage lifetime.Below, we will walk you through exactly how to formulate these functions into a single, actionable number. LTV is primarily a function of the following three variables. If your total user base is an indicator of your app’s health, high-quality users are the pure protein you want in your diet. High-quality users are users who visit your app often, frequently engage with app features, and make purchases. This value not only helps marketers identify high-quality users who are driving profit over their acquisition cost, but also contributes a quantifiable number to the broader performance of your mobile marketing strategy such as user loyalty benchmarks, growth forecasting, and overall app success. LTV, or user lifetime value, describes how much revenue a user generates for your business over the entire duration of their relationship with your app.Īs far as metrics used to measure the success of your mobile app go, LTV should be your North Star. ![]() If it sounds like potentially one of the most important marketing metrics to have on your radar… that’s because it is. In other words, if users are your lifeblood, LTV is effectively a way to run bloodwork and illuminate the vitality and longevity of your user base. Mobile user lifetime value (LTV) is a metric used to assign value to a new user of your app and an indispensable data point to adopt (or abandon) important marketing strategies. But user behavior can often be unpredictable and unreliable. Their behavior (use-frequency, engagement, purchases) drives the bulk of your revenue and determines long-term success or failure.
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