LTV: Money matters — but not if you’re tracking the wrong events

Anne Verhoeven

Sep 11, 2019

LTV is the metric you can’t afford to get wrong — ever. At a high level, it tells you how much a user is worth. It’s the data point that can serve many purposes. It can tell you if your app will be (or stay) a commercial success. It can help you forecast growth for your business. It can be a litmus test for user loyalty and alert you to when (and why) your app is losing favor with your target audiences. LTV provides to all this and much more. But at its core, LTV informs your marketing budget.

The problem is: there’s no one-size-fits-all formula to determine LTV. In fact, there are many different ways to calculate it, depending on your app category and objectives. To further complicate matters, LTV, which is predictive and based of probables and possibles, is also mathematically complex. It requires serious brain power if marketers want to foolproof their forecasting model against change. Getting LTV right is also the only way to ensure you make money, not burn it. For all these reasons getting LTV right is a must. Knowing allows you to allocate budget and pay what users are really worth, ensuring your campaigns have a healthy return on investment (ROI) and turn a profit.

This week on our web series “The Lowdown,” Mike Paxman, Adjust Global Product Communications Manager, takes a look at how you can customize your LTV measurements in three steps to get value for money from all your users. As Mike points out, some users “may not open their wallets and bring you revenue,” but that doesn’t matter. There are other ways marketers can extract tremendous value from users based on how they “interact and engage with your app.”

1. It’s all in the setup

First thing’s first: get your setup right. As Mike says, tracking “any and every interaction within your app that has value to you” is a smart move. Go beyond tracking the default in-app events such as sessions, install and purchases and look to casting a wider net of user behavior through custom events in your dashboard.

The custom events you choose to track will vary from one app and vertical to another. Retail apps, for example, might track standard events such as adding an item to a cart, checkout, and payment. By tracking custom in-app events — such as applying a discount code, saving items to a favorites list, or inviting a friend to the app — you can factor in non-monetary interactions that are still important engagements for understanding a user’s LTV.

2. Assign a value to non-monetary interactions

After you’ve set up your dashboard to track a broader range of engagements within your app, Mike recommends assigning a value to each non-monetary interaction. Taking a gaming app example, you might want to assign five points for the action of inviting a friend. Once you’ve applied a points value to each additional interaction that you’ve identified as important for your app, you can add these points to your customized LTV algorithm.

3. Put your knowledge to use

So, you’re set up to track all of the interactions within your app that are valuable to you and calculated your users’ LTV. Now it’s time to put this knowledge to use! Armed with this data, you’re better equipped to make more informed decisions when it comes to your future app marketing strategies. With a clearer understanding of which channels and creatives bring you these valuable, high-LTV users you can refine your marketing strategy which will, in turn, help you reach your overall business goals.

Given the complex nature of a predictive algorithm like LTV, that shifts and changes as user behavior evolves, it’s important to review it on an ongoing basis in order to uphold a positive ROI.

To learn more about LTV and how you can optimize your Adjust dashboard to track custom events, get in touch with our sales and support team.

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