Analysis of Lifetime Value Using SQL and Python: Part 1

In the next video, Favio will begin the analysis by explaining what lifetime value (LTV) exactly is and what the objective of our analysis is going to be. Let us go ahead and watch the video.

So, in the video, you learned what LTV means in the context of our case study. Favio defines LTV as the total worth of a customer to a business over the entire duration of their relationship. It is an important metric as it costs less to keep existing customers than it does to acquire new ones; so, increasing the value of your existing customers is an excellent way to drive growth.

From the next video, Favio will construct some questions that will relate to our business objectives and then perform an analysis to answer these questions. Let us go ahead and watch the forthcoming video.

So, in the previous video, we were able to gather this insight from the data:

• The average total charges (lifetime value) for the top 20% customers are very high.

Moving on, in the next video, Favio will analyze the bottom 80% of customers to check whether there is a significant difference between the customers in these two segments. Let us go ahead and watch the video.

So, in the video, you saw that there is a significant difference in total charges between the customers in the low- and high-LTV segments. 

Since our objective is to convert customers in the low-LTV to the high-LTV segment, we will try to understand the different variables that we should focus on in order to achieve this purpose. In the next segment, Favio will try to identify the variables that can bring customers closer to the high-LTV group.