You’re running a Search campaign for an accounting software provider that wants to estimate lifetime customer value as a primary benchmark for performance. They charge $10/mo for Basic service and $20/mo for Pro. Which formula best describes their average lifetime customer value across all service offerings?

You’re running a Search campaign for an accounting software provider that wants to estimate lifetime customer value as a primary benchmark for performance. They charge $10/mo for Basic service and $20/mo for Pro. Which formula best describes their average lifetime customer value across all service offerings?

  • ($10)*(% Basic customers) + ($20)*(% Pro customers)
  • ($10)*(% Basic customers)*(Basic average lifetime in months) + ($20)*(% Pro customers)*(Pro average lifetime in months)
  • ($10*20)*(Total monthly conversions) / (Total customer count)
  • ($10+$20)*(% Basic customers)*(Basic average lifetime in months) / ($20)*(% Pro customers)*(Pro average lifetime in months)

The correct answer is:

  • ($10)*(% Basic customers) + ($20)*(% Pro customers)

Explanation: Life time value cannot be decided in months or years. There is no way to determine how long your customer will keep using your service.

You can read more here: https://support.google.com/partners/answer/2796446?hl=en