Lifetime Value (LTV)

So, I asked a date if she wanted to meet up for dinner. As it turns out, she didn’t like eating out in restaurants on the weekends as they tend to get quite crowded. She called me over to her place instead. Now, if someone calls you over, you take a pleasantry like a wine bottle. That is a normal courtesy; I forgot to take anything. To be fair to me, I was too excited, so it slipped my mind. Her place had the perfect ambiance with scented candle lights and dimmed lighting. She was looking quite cute in her pajamas and floaters. We had dinner, and thankfully, she wasn’t banking on me for the wine. After dinner, we decide to chill on a couch in her living room.

Anyway, coming to the MBA concept of the  ‘lifetime value (LTV)‘. It’s a prediction of the net profit attributed to the entire future relationship with a consumer. This is the reason why a number of startups are seen as promising investment opportunities by investors despite not having broken even (cash positive) for years. It is the future revenue they would drive from consumers due to the change in spending behavior which is promising. So in short, LTV prediction means how much value would that consumer be able to provide to the brand in a lifetime.

A quite similar analogy to LTV can be drawn in the modern dating scenario. What exactly are you looking out of an association? Is it a casual encounter, a relationship, friends or pen pals, can be anything? It could also be different for different dating options of yours. There could be someone who you don’t see anything more than a fling; someone else who you are keener on taking things forward with on the romantic front or maybe a friend. The two of you should be very clear right from outset, with each other as well. It saves a lot of heartbreaks and wastage of time. So with someone whom you are interested in romantically, probably getting to know each other better and higher lead time is advisable.

So if you meet someone with whom you might want to spend substantial time in a relationship, it is very well possible that the initial few meetings are awkward dinner dates which might not be as enthralling as a casual encounter you had in a European bar once.  Over a lifetime though, it might very well be a much more enriching experience. And happiness is different from momentary pleasure.

LTV summation

Discount factor helps normalize the date scores across the timeline. For example, we are comparing the net success of two siblings with an age gap of ten years based on salaries then we’ll have to use a discount factor to account for the time difference.  A salary of $200,000 right now doesn’t hold the same value as a decade back.  The concept of the discount factor in the context of dating is very interesting. It is different across people and depending on the stage in life. One of the reasons for my short-spanning romantic interactions is that I haven’t dated anyone whose average romantic value increase over subsequent dates, probably because of a higher affinity towards dopamine.

That brings me the wine date. So is this it? It was her last night in the city and was supposed to get married within a few days. My lifetime value for her was just one night. Post dinner, I came back within the next hour as the wine bottle isn’t the only thing that I forgot about taking.



4 thoughts on “Lifetime Value (LTV)”

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