1 00:00:00,460 --> 00:00:05,490 In an earlier video, we discussed how LTV is essentially a forecast 2 00:00:05,490 --> 00:00:08,310 of the value a customer will bring us over their lifetime. 3 00:00:09,480 --> 00:00:13,913 In the example we shared earlier, a customer that pays us \$10 a month, 4 00:00:13,913 --> 00:00:15,065 signing up today. 5 00:00:15,065 --> 00:00:19,574 On a product that has average monthly gross turn of 20% will 6 00:00:19,574 --> 00:00:23,560 have a \$50 LTV before factoring in costs. 7 00:00:23,560 --> 00:00:25,300 As with all forecasts or 8 00:00:25,300 --> 00:00:29,480 predictions, sometimes things don't play out as expected. 9 00:00:29,480 --> 00:00:34,450 Perhaps a new product enters the market, a recession hits, who knows? 10 00:00:34,450 --> 00:00:38,740 Because we are projecting LTV for a customer we just acquired today. 11 00:00:38,740 --> 00:00:41,800 Based on metrics derived from historical cohorts, 12 00:00:41,800 --> 00:00:45,280 we need to monitor the metrics that are inputs to LTV. 13 00:00:45,280 --> 00:00:47,354 How often we do this depends on A, 14 00:00:47,354 --> 00:00:51,589 how sophisticated our business information and data systems are. 15 00:00:51,589 --> 00:00:55,290 And B, how rapidly our business is changing. 16 00:00:55,290 --> 00:00:59,780 Also, what if our customer lifetime is 36 months? 17 00:00:59,780 --> 00:01:03,600 We are making customer acquisition cost goals based on an LTV 18 00:01:03,600 --> 00:01:06,660 that pays back over a long period of time. 19 00:01:06,660 --> 00:01:10,800 That could potentially be too long, depending on how much cash we have. 20 00:01:10,800 --> 00:01:15,330 We'll soon introduce a measure of LTV that can help control for that. 21 00:01:15,330 --> 00:01:19,320 But first, we need to introduce a specific type of chart or 22 00:01:19,320 --> 00:01:22,250 report known as a cohort report. 23 00:01:22,250 --> 00:01:26,460 If you already know what cohort reporting is, feel free to speed up the next video 24 00:01:26,460 --> 00:01:29,950 or skip ahead directly to the video on realized LTV.