Lifetime Value (LTV) is the estimated total revenue a customer will generate for a business throughout their entire relationship, taking into account the customer's lifespan and purchasing behavior.

‍

Why is Lifetime Value (LTV) important?

Lifetime Value (LTV) is important because it helps businesses understand the long-term value of a customer, informing decisions related to customer acquisition, retention, and resource allocation.

‍

An easy way to understand Lifetime Value (LTV)

Imagine predicting how much money a single customer will spend on your products or services over the entire time they remain a customer, helping you decide how much to invest in acquiring and keeping them.

How to Calculate Lifetime Value (LTV)

LTV = (Average Revenue per User × Average Customer Lifespan) - Customer Acquisition Cost

For example: If the average revenue per user is $100 per year, the average customer lifespan is 5 years, and the customer acquisition cost is $50, then the LTV would be: ($100 × 5) - $50 = $450

At Kosme Aesthetics, we offer loyalty programs and personalized skincare plans to enhance client retention and increase Lifetime Value.

This metric guides our strategic decisions, ensuring that our marketing and service offerings are aligned with enhancing the value received from each client, thereby optimizing long-term profitability.