triloquism
New member
Some blog articles (1, 2) recommend the following:
As a minimal example, let's say I have two customers (A and B).
Both have bought the product for 10$. So both customers have an CLTV of 10$ (assuming, for simplicity, subscription and further purchases do not happen, thus
).
User B only learned about the product, because user A recommended it to them, and I have tracked that.
So now I add something, for example 5$, because this is my typical customer acquisition cost, to the individual CLTV of user A for this. Thus now I have:
-
-
But in overall I still only earned 20$ from them, not 25$. So the CLTV would be an overestimation of the actual value.
How does one solve this correctly?
Should one make it a zero-sum game, i.e., subtracting the 5$ from
?
Code:
CLTV = ARPU * 1 / Churn + (referral value)As a minimal example, let's say I have two customers (A and B).
Both have bought the product for 10$. So both customers have an CLTV of 10$ (assuming, for simplicity, subscription and further purchases do not happen, thus
Code:
Churn = 1User B only learned about the product, because user A recommended it to them, and I have tracked that.
So now I add something, for example 5$, because this is my typical customer acquisition cost, to the individual CLTV of user A for this. Thus now I have:
-
Code:
CLTV(user A) = 15$
Code:
CLTV(user B) = 10$But in overall I still only earned 20$ from them, not 25$. So the CLTV would be an overestimation of the actual value.
How does one solve this correctly?
Should one make it a zero-sum game, i.e., subtracting the 5$ from
Code:
CLTV(user B)