Lifetime Value

Lifetime value (LTV), also known as customer lifetime value (CLV), is a metric that estimates the total revenue a business can expect from a customer over the duration of their relationship. It is crucial in both Design Thinking and Growth Hacking, as it helps teams understand the long-term impact of their efforts on customer loyalty, retention, and profitability.

In Design Thinking:

• User-Centric Solutions: By considering lifetime value, design teams can focus on creating products or services that not only attract users but also foster long-term engagement and satisfaction.
• Enhancing Retention: Solutions designed with user needs and expectations in mind help increase customer loyalty, improving LTV by encouraging repeated use and ongoing trust in the product.
• Measuring Impact: Tracking LTV alongside usability and satisfaction metrics provides a broader picture of how well design efforts contribute to business goals.

In Growth Hacking:

• Prioritising High-Value Users: Growth hackers use LTV to identify and target customer segments that generate the most long-term revenue, optimising marketing and acquisition efforts.
• Optimising Acquisition Costs: Understanding LTV helps growth teams balance customer acquisition costs (CAC) against long-term profitability, ensuring sustainable growth strategies.
• Focusing on Retention Strategies: Growth experiments aimed at improving user retention, such as loyalty programmes or personalised experiences, directly contribute to increasing LTV.

Examples of Application:

• In Design Thinking: Designing a premium feature for a fitness app aimed at increasing user engagement over time, thereby boosting LTV through recurring subscription revenue.
• In Growth Hacking: Running an email campaign to re-engage dormant users with tailored offers, improving retention and increasing the average LTV of the customer base.

Lifetime value is a critical metric in both Design Thinking and Growth Hacking, bridging the gap between user satisfaction and business outcomes. By focusing on strategies and solutions that enhance LTV, teams can build stronger customer relationships, improve profitability, and achieve sustainable success.