How should mobile developers calculate the lifetime value of a customer?


A recent video clip from Boston-based analytics firm Localytics promises to help developers make sense of what the company's vice president of marketing Bernd Leger calls "customer lifetime value" and others dub "lifetime value of a customer" (LTV). As he walks viewers through the various ways developers can think about measuring the worth of individual customers or segments, Leger readily acknowledges that approaches vary widely.

"If you look on Wikipedia... you have to do a quite-complicated calculation of your net present value. You have to make a prediction about the future," Leger says in the clip. "You can make (it) as complicated as you want it to be, or you can make (it) as simple as you want it to be."

No doubt most indie developers would opt for simplicity, but experts told FierceDeveloper that getting there takes some education. "It is not an easy metric to grasp, compute and leverage for most new developers," says Arun Pattabhiraman, global developer marketing lead for InMobi, which offers a tool for assisting with the calculations. As the app industry matures, however, expect to hear a lot more about LTV, he said. "It is the most effective and meaningful way in which developers can plan their marketing budgets for user acquisition." If you're new to LTV, here's a crash course that will help you assess your progress. Feature