How to Use Rockerbox to Calculate Your LTV

Calculating the Lifetime Value (LTV) of your customers is crucial for understanding the long-term profitability of your business. The value of a new consumer to your business is not simply the value of the first conversion that they make, but the sum total of all the conversions they make over their entire relationship with your brand. Knowing how much a customer is worth to you at the point of acquisition, and being able to set your CAC / CPA thresholds appropriately is essential for being able to budget media properly.

Rockerbox’s platform contains all the data necessary for you to do this work, as well as understanding which media channels drove which customers, and hence how much profit. Each conversion made by a brand is recorded by Rockerbox, including the identity of the consumer making the purchase, allowing a full consumer lifetime of conversions to be analyzed. 

Here’s a step-by-step guide on how to use Rockerbox to calculate your LTV.

1. Gather conversion data

Start by querying your conversion data. Ideally this will be a long time series of several years of data including the date of conversion, which products were purchased, and revenue. Ensure that your dataset includes all relevant products and services and a customer ID that can be used to stitch together conversion journeys and identify the first conversion from each consumer.

2. Define the subset of data for analysis 

Exclude any outliers, such as buyers with unusually high purchase volumes, to avoid skewing the results.

3. Identify Customers

Use your customer ID to track customer purchases over time. Hashed email addresses or any other unique ID should work. Be aware of potential limitations, such as customers changing their email addresses or purchasing gifts for others, which can create disconnects in the data.

4. Calculate Initial Purchase Revenue

Determine date of and revenue from the first purchase for each customer. 

5. Estimate Lifetime Revenue

Use a Discounted Cash Flow (DCF) approach to estimate the revenue value of a customer at acquisition. Apply an annual discount rate to future purchases to calculate their present value. 

6. Determine Purchase Multipliers

Calculate the multiplier from the first purchase revenue to the lifetime revenue. For customers with limited repeat behaviour this could be close to 1. For instance, a multiplier of 1.25 means that the lifetime value of a customer is 1.25 times the value of their first purchase. For other brands with substantially more repeat behaviour

7. Incorporate Margins and Membership Data

Add a margin multiplier to convert lifetime revenue to lifetime value. Include membership data to get a combined purchase and membership LTV. This comprehensive approach ensures that all revenue streams are considered.

8. Analyze Cohorts

Segment your customers into cohorts based on their acquisition date. Analyze the purchase behavior of each cohort to identify trends. For example, Oura Ring found that customers acquired in 2020 made an average of 1.46 purchases over their lifetime, while those acquired in 2025 made 1.07 purchases.

9. Adjust for Spikes in Purchase Volume

Account for spikes in purchase volume around new product releases. These spikes can significantly impact the average purchase volume and should be factored into your LTV calculations.

10. Set Customer Acquisition Cost (CAC) Thresholds

Use the LTV to set CAC thresholds for new customers. This helps in budgeting and forecasting, ensuring that your marketing efforts are cost-effective. For Oura Ring, a multiplier of 1.32 was used to set these thresholds.

Conclusion

By following these steps, you can effectively use Rockerbox to calculate your LTV. This process not only helps in understanding customer value but also in making informed decisions about marketing spend and customer acquisition strategies.