Understanding Customer Lifetime Value

casino ltv

There are many very important metric systems available today which can help a casino to take account of its overall performance, customer lifetime value (CLV) or LTV is one of them.  This comparative system is based on the data pertaining to the amount of money or revenue generated from a single player since his arrival to the end of the stay on the site.

Determining the customer lifetime value not only helps in gauging the performance of a casino but also helps in planning marketing as well as improving customer relationship management to boost the business.  It also helps to understand which segment of the players is more valuable for the casino.

Calculating Customer Lifetime Value

The simplest way to calculate LTV is by just multiplying average revenue per user with the average time (in months) spend by the players.  The most difficult part of this calculation is determining the average lifetime of a player.  This is even more difficult for the casinos which are relatively new in the market. 

The basic concept behind this calculation can be summarized as LTV being an estimated value or the revenue generated by a player since the date of his joining till the end. The customer lifetime value is used to compare it with the predicted average lifespan of a player. 

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This formula can be defined as LTV = average revenue per user (ARPU) x average time period spent by a player.  The ARPU can be calculated by dividing revenue generated in a particular period of time by the number of active players in that period of time.

Importance of Customer Lifetime Value   

As mentioned earlier, this metric system can help a casino to measure its overall performance, apart from this it can also help in estimating the potential value of a player.  This estimation can further help in creating and administrating customer retention services.  Even though benefits related to keeping players committed to the casino are self-explanatory, but spending over the limit to retaining them can be negative for the business.  

It is an established fact that all players are not equally valuable.  For example, a person betting a few dollars on sports betting once or twice in a year is certainly less valuable than the one who regularly spends a higher amount of money while indulging in table games provided by the casino.  Based on this observation, a casino must pay more attention and spend its retaining budget on the latter as compared to the former.  

Raising Customer Lifetime Value

In order to get higher revenue, it is imperative for a casino to raise LTV as high as it can.  This can be achieved by retaining a player to spend maximum time on the site; by urging the player to spend more and by retaining high-value players.  The best way to extend the lifetime of high-revenue generating players is by effectively using the customer relationship management software.

The players can go on providing revenue till they feel that the casino is providing value back to them. This can be effectively managed by providing loyalty benefits and certain programs that can make them feel more important and comfortable while spending more money along with extended hours. 

Proper management of the customer service always helps in low churning out of players and increases average lifetime.  The other most important and effective method to increase the customer lifetime value is by providing quality products and by keeping the content of casino up to date.      

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