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How To Calculate Lifetime Value - The Infographic
Specifics of how to compute LTV or CLV of customers using Starbuck's data from 2004.
ESB6  esb7  ch9  customer  customeracquisitioncosts  customerdata  ltv  clv 
may 2019 by jeromekatz
How to Calculate Customer Lifetime Value (CLV) to Market to High Value Customers
Explains CLV and points you to a Excel spreadsheet to help calculate it for B2B and B2C businesses.
ESB6  esb7  ch9  customer  customeracquisitioncosts  customerdata  clv  ltv 
may 2019 by jeromekatz
Farfetch IPO: Strong Unit Economics Support Its Projected Valuation
After customers are acquired, they have very long lifetimes and spend a lot while they are alive. The net present value of all future revenue a new customer generates for the firm is an eye-popping ~$4K.

If we were to assume that Farfetch earmarked all demand generation expenses for new customer acquisition, Farfetch is spending about ~$100 for each new customer it acquires.

CAC has been very stable, if not slightly declining, over the past few years.

Our most conservative variable profitability assumptions imply Farfetch customers generate approximately $500 in marginal profits after they are acquired, in net present value terms. We suspect their post-acquisition customer values may actually be closer to $1,000 with more realistic assumptions about their variable cost structure. Netting out the CAC that Farfetch spent to acquire these customers, this implies a customer lifetime value of ~$400-900, a ~400-900% return on their customer acquisition spend.

Farfetch has attractive cash flow dynamics. Its current non-financial working capital ratio to sales stands at -17%, dramatically reducing their cash needs as they grow and making them less beholden to the capital markets as they grow their way into profitability in coming years.

If Farfetch is able to continue acquiring customers with unit-level performance comparable to what we have seen to-date and if it is able to bring the G&A margins down to the level of its peers,  we forecast that Farfetch’s current valuation is entirely justified on a discounted cash flow basis. Our fair value estimate assuming its unit economics remain stable is ~$20.
april 2019 by ramitsethi
Why you should focus on customer lifetime value - CMO Australia
"... incent them on the basis of the incremental boost to the lifetime value of the customers who buy that product ..."
business-development  CLV  LTV 
december 2018 by ihuck

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