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A Complete Guide to increase LTV lifetime value of users for your SAAS start-up?

By April 29, 2018 No Comments

Customer lifetime value is one of those projecting scopes that can actually be easy to calculate, but it is very difficult to change. You invest money in your acquiring avenues. Try different ways for up-selling, cross-selling, and whatever other new strategies have arisen on the current marketing blogs.

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Although there is considerable advice on the Internet, which prompts you to make quick decisions to improve your average LTV, the reality is that not many times, you need to reconsider your whole strategy In more technical terms, the average LTV is similar to the average revenue per account tripled by profit and then divided by the churn rate.

 

LTV= ARPA X Gross margin

Customer Churn rate

 

In order to compute your average revenue per account, multiply the average subscription costs of all your users and then the gross margin of each account.

Gross Margin=   Profit

Revenue

Calculation of gross margin is usually done in percentage points, which means that the margin is a percentage of your profit by each customer.

For example, if your subscriber’s membership is $ 30, but if you are running their product per month 15 dollars per month per customer, the gross profit margin is $ 15 or 50 percent.

Gross Margin= 30/15= 0.5

Finally, your average churn rate is the number of customers who do not renew their service within a month. Although this formula assumes that the churn rate follows a linear trend, which is almost never a matter. Hence, the churn rate can be quite uncertain; keeping an eye on that metric is a sure way to ensure that your expenditure does not disturb on your incomes.

 

Keeping your SAAS carefully beneficial implies your LTT has to constantly compare your customer acquisition cost (CAC). The price of subscribing to your client should not be immersed in the lifetime value of that customer.

Calculating the average LTV is a great first step to ensure that your mother-in-law business is stable and profitable. Improvement is a different story, yet to gain valuable insights that can help you increase your average LTV, you will need to pay attention to the key areas that see the understanding of your average LTV.

LTV is what, which evaluates finances and ultimately leads the company, here is how can marketers help with it?

 Despite the various methods of making LTV optimization strategies, there are four areas as one of the most important building blocks when you are launching your strategy from scratch.

By uniting your data and unifying all your analysis streams, you will be able to split your users, demonstrate your service and effectively earn your strategy.

Okay, first of all, from the first things, to get actionable information from your info, talk about uniting all your data streams.

Join your data:

If you successfully add all your data to a storage solution, such as data warehouses, then you will be able to get weak points in your LTV optimization strategy.

What do we mean by data integration? OK, suppose your service currently has many marketing acquirement pathways, such as Facebook Ads, AdWords, and even user recommendations.

When you can achieve all your acquisition measures through each dashboard created in these services, to take advantage of the strength of these matrix means that they should be placed before each other and measure them in front of each other.

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To do this, you will need to either create a data warehouse or buy pre-built options. Aside from the solution you use by uniting your data, your insights become very valuable.

Use behavioral division:

If you divide your public into purposeful division then you can provide powerful information about how to increase your average LTV. In our knowledge, Behaviour Segment is one of the perfect methods to divvying your users, primarily because behavioral practices are actually responsible for your customers using your application.

Divide your users by your behavior means that they are related to the functionality of your application. This may mean knowing whether they have completed the introduction wizard, whether they have created a project, or what they have set up a profile or not.

Computing the value with these lines enables you to point your most valuable and busy customer base. In return, this allows you to cut down the churn rate of your best customers and target them with specific benefits, profits, or other brand-loyalty awards.

Demonstrate you’re Service:

So you have established your entire user: they generate the highest value, you know where they came from and what they can do now, how do you make your product the best product for them in the market? Suppose you are a mobile game company your valuable user division has come to know about your game via Facebook and loves mining for coins on an everyday basis.

Now, you will need to record this user’s experience in a way that will encourage engagement and conversation.

This could imply that give these users with extra motives, such as the above-mentioned coin, or it may mean offering one month of free premium-level membership as a compensation for their loyalty.

In the real-world example, the Apple’s repair and fixing program of Apple keeps users loyal because they feel secure in their savings.

Privatization of your service means communication value. By recognizing, which part of your user base gets the best answer to an instruction notification, for example, you can link up with your client in a way that is admiring and thoughtful.

Enhance your monetization policy:

The final and most necessary target area for enhancing your average LTV is your monetization policy.

Producing the value of the average LTV of all its clients, however, can be difficult.  For this reason, the behavior is another method of division that is going to bring micro-level changes which will find the macro-level outcome.

Below are some of the methods that you can focus particular groups and expand your average LTV.

Track CTA changes over time:

In several months mapping the various forms of CTA (like email, in-app notification, text message), you can paint a “big picture” of how you are making money with your customers. If you change the user on the email you cancel, then you should know this and you should know those problems as soon as possible. On the other hand, if users are most responsible for in-app notifications, then your product is more likely to buy, then you can try and get more of these clients in your next marketing campaign.

Adapt your pricing model:

Your cheapest subscription cost may still be very expensive, or you may be able to create a separate enterprise solution for a certain segment of your cohort. Aside from, to understand how you’re LTV is different in multi-level pricing models; you can help maximize your LTV for those customers.

Recommend:

Recommending is generally obtaining your client to buy costly versions of your membership.  To know your focus market and various segments of your client/user base can help you conclude which users are more likely to convert to a costly version of your service and which particular services is high- Price membership makes it more attractive to some group.

Try playing with the facilities in your paid schemes and see which types of users can buy the next level, in this way, you can find time, value and method that will work best for converting lower-value customers in high-value customers.

Cross-sell:

Cross-selling emphasizes the sale of various brands or facilities given by your business to a current client.

Are Some of Your Customers Interested In Blogs? If so, there is a great possibility to cross-sell a service for a sub-section of your user bases – such as an e-book or a second part of the content. If you understand a ton regarding your clients and their requirements, cross-selling and up-selling can be big for your average LTV.

These are some thoughts that use visions from your customers to enhance your monetization policy. Ultimately, all these modifications are part of a continuous process; you try away and then see if your average LTV goes to make some more effort before the change.

Conclusion:

Because every business is unique, customizing your LTV can sometimes mean using new and unconventional tactics. By uniting your data and organizing your behavior data, you can boost LTV through different types of new measures, such as the success of your various marketing acquisition channels and various types of CTAs that work best for your customers.

Getting insights from user behavior is especially useful – Given that how your users talk, you provide a compliment for the ways in which your customers actually join your app.

In the end, testing different monetization strategies in user behavior groups has given us important insight that who is more responsible for conversion or churning, using these tests as a litmus test for brand loyalty will make your most valuable helps keep customers targeted by promotions, exemption, and motivations.

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