Customer Lifetime Value (LTV) is a system used by casinos to measure and determine the value of their audience. Calculating these metrics helps a casino to assess the efficiency of marketing strategies and customer relationship management, as well as determine which of the user segments is most valuable for their particular establishment.
From the definition of lifetime customer value, it is already possible to conclude that these metrics are not only used by online casinos, but they are also crucial to them. Therefore, if you are a fan of the industry or plan to launch your own casino, read on to find out more about an LTV.
How a Casino Calculates LTV
LTV measures the suggested net value of every user concerning an online casino from the moment of making the first action on the site until the end of their activity on the platform. LTV is the calculation of the income that is obtained from a player and compares it with the anticipated customer activity within your online casino. Here are the calculations:
- LTV is determined by multiplying the casino’s ARPU (average revenue per user) by the average duration players spend on the online platform.
- To get ARPU, you need to divide the amount of income earned by the casino over time by the number of players who were on the resource during the same period.
In other words, customer lifetime value is the total amount of profit won by the user over the entire time that he interacted with the online casino.
LTV Indicators & Their Importance
An accurate calculation of the potential customer value is directly related to strategies aimed at the attraction and retention of the audience. Keeping a user interested in an online casino is an essential task for every establishment. The main goal is to achieve this and spend less than clients will spend on your online casino.
Not all users are equally important. For example, a player who bets on a soccer game once in a while is less valuable than someone who spends hundreds of dollars a year in online slots. Therefore, your focus and your marketing budget should be proportionally divided among similar segments of your customers according to their value.
It is also very important to maintain a balance between customer lifetime value (LTV) and new customer acquisition costs (CAC). There is an unspoken rule — a three-to-one ratio — that dictates that customer lifetime value should be three times the cost of acquiring new customers. At the same time, some experts argue that the ratio of two to one is not at all critical. One way or another, the larger the ratio, the more tangible the return on investment.
A deep understanding of LTV can help online casinos understand the value of specific segments of their audience and tailor their custom services appropriately. After all, every business, especially in the field of gambling, is supposed to bring benefits. The better you calculate and measure LTV, the better your marketing strategy will be.