

How ARPU can lead to a 120% error in Customer Lifetime Value - pospischil
http://blog.custora.com/2012/01/clv-in-retail-how-arpu-can-lead-to-a-120-error-in-clv/

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3pt14159
I've done many, many LTV and CLV reports for companies and I always account
for this. Protip: churn also goes down for SaaS apps. Also, you need to
account for a discount rate but most of the time people don't want to hear
this because it makes their numbers look less shiny. Pretty basic math, all
things considered.

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aaronjg
Churn also goes down in retail. If you look at retail cohort analysis, you
will say that 10% of users are active three months after their first
transaction, and then 5% are still active six months later. So you lose 90% in
the first three months, and then only 50% in the next three months.

This is particularly important in the RLV calculations, as assuming a constant
churn rate will undervalue your existing customer base.

Sounds like you are taking the right factors into account. What sort of
accuracy are you getting with your calculations?

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3pt14159
Pretty close. Usually around 5 to 15 percent when taking off the top 2% of
customers.

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badclient
Whatever font you guys are using for the body of the post is very difficult to
read.

