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Lesson 12: Understanding LTV, ROI, and Using the Waterfall Report

· 2 min read
Max Kaido
Max Kaido
Architect

Lesson 12: Understanding LTV, ROI, and Using the Waterfall Report​

1. Estimating LTV for Your Product​

Lifetime Value (LTV) is a metric that reflects the total profit a company expects to earn from a single customer throughout their relationship. To estimate the LTV for your product, you can follow these steps:

  • Average Purchase Value: Determine the average amount a customer spends per purchase.

  • Purchase Frequency: Estimate how often a customer makes purchases over a specific period (e.g., monthly or annually).

  • Average Customer Lifespan: Determine how long a customer remains an active buyer.

LTV is calculated using the formula:

LTV = Average Purchase Value × Purchase Frequency × Average Customer Lifespan

If exact data is unavailable, you can use industry benchmarks or similar companies for an approximate estimate.

2. ROI on Day 30 for the Main Sales Channel for the Primary Customer Segment​

Return on Investment (ROI) measures the profitability of investments. To calculate the ROI on Day 30 for the main sales channel, use the formula:

ROI = ((Revenue from Customers in 30 Days - CAC) / CAC) × 100%

Where:

  • Revenue from Customers in 30 Days: The total amount earned from customers in the first 30 days.

  • CAC: The cost of acquiring one customer through the chosen channel.

For example, if the revenue from a customer in 30 days is 5,000 rubles, and the CAC is 4,000 rubles, then:

ROI = ((5000 - 4000) / 4000) × 100% = 25%

This means that on Day 30, the investment yielded a 25% profit.

3. Elevator Pitch for Your Product​

What and for whom you are doing it. What it resembles.

We are creating a [product/service] designed for [target audience], similar to [well-known product/service].

What's the unique selling point

Our uniqueness lies in [unique proposition], which allows [customer benefits].

Where the money comes from

We earn by offering [monetization model], which provides [financial benefits].

Call to action

Join us today: [action the customer should take, e.g., download the app, subscribe to the newsletter].

Example Elevator Pitch:

We have developed a mobile application for busy professionals that helps manage time effectively, similar to how Trello organizes tasks. Our uniqueness is the use of artificial intelligence for personalized recommendations, which increases productivity by 30%. Monetization is achieved through a subscription model with premium features. Download our app today and start managing your time more effectively!

Note: For accurate data on LTV and ROI, it is recommended to conduct a detailed analysis considering the specifics of your project and available data.