LTV (lifetime value) is a key metric for identifying the quality of traffic in terms of many verticals in affiliate marketing, Gambling is not an exception.
Many CPA networks use this KPI to determine the traffic quality of leads, but in the article we’ll answer the question “what is LTV in Gambling?”.
LTV in Gambling meaning
LTV (lifetime value, also known as a customer lifetime value, CLV) in Gambling — a metric that shows the total income a customer can bring to a casino website during his presence on a site.
Basically, this helps a business calculate the potential profit from one user starting from his first game to the last.
Thanks to the LTV metric, an advertiser can also calculate such an indicator as customer aquisition cost, CAC, also known as CPA in affiliate marketing. Knowing these metrics, business owners can find out the income and expenses of an online casino and increase profits.
Now that you understand what is LTV in Gambling, let’s have a look at the formulas to calculate it when it comes to this vertical.
1. Calculation using APRU metric
First, let’s understand how to count each of the metrics and their meaning for a complete comprehension of this formula.
- APRU — the average revenue from a client for a certain unit of time. In order to calculate this metric, you need to divide your income for a certain period (month, year, week) by the number of customers for the same period.
- Lifetime —the total time of working with the client, from the first deposit to the final payment.
LTV = Total revenue of a site/ total number of players
2. Calculation via cohort analysis
First of all, let’s look at the concept of a cohort analysis.
Due to such an analysis, you can find out the LTV for a group of clients at once. It is worth forming several cohorts for a full analysis — groups of users who made their first deposits in different months.
Once you have identified several cohorts, you need to calculate the ARPU for each. You need to add up the revenue from all users in a particular group and divide it by the number of people in it.
LTV= the total sum of all ARPU during the whole time a person made deposits
How to increase LTV for a Gambling website?
Obviously, knowing LTV is a great way to understand and retain the target audience as well as skyrocket the overall revenue and make huge profits for an online casino website.
The main question is how to increase the metric if it’s not high enough? We’ve collected several most efficient ways:
- Diversify the games you offer.
It means working on the content you offer, it’s crucial to provide different slots to keep players entertained. The more new experiences you deliver, the longer users are willing to stay.
- Offer bonuses and discounts.
Everybody loves when their loyalty is rewarded, so offer discounts for players who stay on a website for some time or first-time bonuses. It’s also possible to provide some extra bonus for bigger deposits.
- High-quality customer support.
The experience customers have on the platform is also defined by the communication skills of your support team as well as their ability to solve problems quickly. Make sure your employees are well-trained and polite.
- Keep players informed.
It’s vital to notify them when you have discounts or some fresh games or features on the platform. This way you’ll keep them interested and updated, this surely increases retention.
Why is it crucial to count LTV?
This indicator is vital to know for both marketers and casino owners for several reasons.
For example, if a webmaster works using the RevShare or Hybrid payment model, he receives a percentage of sales, so it is important to calculate the costs for a potential client in advance as well as the approximate income that can be gained.
Therefore, knowing LTV, both marketers and business owners will be able to correctly optimize investments for a product promotion and understand the average income per use they can get in a certain period of time.
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