What is LTV in Mobile Apps World? What You Need to Know

I think the um kind of what I was saying in the beginning like a new app developer really just focuses on downloads you know like that's the first thing that they after they launch their app in the app store they just go straight to the down downloads number um and you know it's not about downloads what I found over a long period of time is that you know it's a very enticing metric to look at it's like oh man I'm starting to go viral uh that that that's great and all but really you're trying to if you're trying to make a sustainable app you got to start on the very early side focusing on like paying users or like users that'll pay you um and so you know installs is good to a degree like you do need users but really you want to figure out what users monetize for you first um and that's kind of it it sounds

uh you know coming from the valley it it sounds counterintuitive like you always hear about these Tech crunch guys uh that launch on Tech Crunch and it's like oh man they are uh download like they're going viral they're getting tons of VC money Etc but honestly they have like no way to monetize uh and it's always like Kick the Can down the road but a lot of the and a lot of those guys will like flame out um so what I tend to encourage our customers to do is really figure out like which which users are the most profitable ones very early on um and so kind of jumping into the next slide um the the first thing is okay can we get paying users and then the second thing is like can we uh measure the lifetime value of those users um and you'll notice that um lifetime value literally means like over the lifetime of of of a

user uh how much do they end up generating in revenue for you um so you'll see these these tags on LTV which are like day seven so this this means this is a cohort of users that have lasted seven days in their lifetime so far um and I kind of explain that uh on the next slide which is everything is cohorted by the time of the install so if on January 1st you get a 100 users those 100 users will stay in that cohort of January 1 and so January 7th day seven LTV will be a certain amount the cohort of January 2nd users will be on January 9th um and so um LTD is literally just like how much money do these do do each of these cohorts generate in that period of time um kind of then go to the next side um and so one thing you'll notice it's always monoton or it's always increasing so so it's a cumulative

number um over a period of days and the cohorts will always be look similar to this and the reason for the curve um usually is because uh the customers or the users are turning out so or they're paying less over time so marginally every day that goes by there will be less interaction with your app um and this is like the most common thing um we have seen every so often the inverse where you get like a sublinear or a linear or um um like exponential type of curve which is even greater right like so they spend more and more over their lifetime so they're getting more and more engaged but the typical we work with like a lot of gaming apps and the typical thing is like the game becomes less interesting um so they they tend to interact less and less over time and the Go the whole goal is to figure out how to uh get this curve higher uh whether it be through the product or through your marketing activ ities