Calculating LTV by Segments

Calculating LTV for customers as a whole is useful. Calculating the LTV of customer segments is even more useful. An automobile company may find that the LTV of various models may be quite different, as shown in Chapter 4. Two factors, in general, are responsible for the difference:

1. The manufacturer’s profit per car

2. The repurchase rate

With that knowledge, it is possible to determine the additional total profit that a company would earn if the repurchase rate could be modified by changing the behavior of customers. This knowledge can lead to the development of marketing programs aimed at particular customer segments.