The idea
Under steady monthly contribution m, retention r and discount rate i, the future-period contribution model is CLV = m × r / (1 + i - r). It excludes a current-period contribution and acquisition cost. With m = 2,000 MMK and i = 1% monthly, raising r from 95% to 97% increases modelled CLV from about 31,667 to 48,500 MMK, or 53%. Keep all rates on the same time basis, keep nominal cash flows consistent with nominal discount rates, and test alternative retention assumptions.
Use it thoughtfully
- Calculate value by segment using margin, not revenue.
- Cap acquisition spending well below segment value.
- Spend retention money where value and risk are both high.
An example
ILLUSTRATIVE EXAMPLE: A Myanmar team limits free data for new SIMs to 8,000 MMK, which a 2,000 MMK monthly margin repays in four months.
A question to try
For each segment, how many months does your acquisition spending take to pay back?
A useful framework is a starting point, not a guarantee. Effects vary with the audience, product and situation. Use truthful evidence, respect customer choice, and test the result.