Lifetime Value Calculation for Product Managers

Lifetime Value Calculation is a metric used by product managers to estimate the total revenue a business can expect from a single customer account throughout their relationship with the company. This calculation helps in making informed decisions about customer acquisition, retention strategies, and resource allocation.

Example

Netflix uses Lifetime Value Calculation to guide its decisions on content acquisition, production, and marketing. By understanding the long-term value of a subscriber, Netflix can justify the significant investment in original content, knowing that it increases subscriber engagement and retention, ultimately leading to higher overall revenue.