LTV
Very goo post from Andrew Chen about the customer Life Time Value
LTV for retail sites versus social sites
For retail sites, the calculation of LTV is pretty clear. In plain English, you might define it as:
The stream of all previous and future profits that a user generates from their purchases
So for a given user, you'd add up all their previous transactions and then add that to whatever model you've created about their likely future transactions. Part of what makes this work is that:
Transactions in a retail setting are unambiguous
Each individual makes an isolated impact on the system, in the form of a transaction
Retail buying has a long established history of data, both online and offline
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