Mobile Dev Memo Podcast Season 7, Episode 10: Unpacking Customer Lifetime Value (with Daniel McCarthy)
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Sep 23, 2025 Daniel McCarthy, an Associate Professor of Marketing at the University of Maryland and co-founder of CLV-focused ventures, dives deep into Customer Lifetime Value (LTV) in this engaging discussion. He unpacks the critical role of LTV in business strategy and highlights common pitfalls in its calculation. Daniel stresses the importance of appropriate segmentations and collaboration with finance teams for accuracy. He also examines how digital markets differ in LTV measurement, using Netflix’s monetization shift as a case study.
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Include Discounting In LTV
- LTV is the net present value of all costs and profits tied to a customer from acquisition onward.
- Discounting future cash flows materially changes LTV and must be included for long-tenure businesses.
Apply A Realistic Discount Rate
- Apply a discount rate because a dollar today is worth more than a dollar later and investors expect a return.
- Choose a discount rate that reflects investor hurdle rates to avoid overstating lifetime value.
Use Contribution Profit, Not Just Revenue
- LTV must reflect contribution profit, not just revenue.
- Include acquisition costs and variable costs tied to revenue and exclude pure fixed overhead when appropriate.