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Calculate LTV for New SoFi Invest Members

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Problem

Business Context

SoFi Invest, a leading investment platform, aims to enhance its customer acquisition strategy by understanding the lifetime value (LTV) of new members. Recently, marketing campaigns have successfully increased new user sign-ups by 30%, but the company needs to assess the financial impact of these new members over time.

Available Data

Data SourceDescriptionGranularity
user_profilesMember demographics including sign-up date, referral source, and account typePer user
transaction_historyRecords of all trades and investment actions taken by usersPer transaction
revenue_dataRevenue generated from fees, commissions, and interest from investmentsMonthly per user
engagement_metricsUser activity data, including login frequency and feature usageDaily per user

Task

  1. Define the lifetime value (LTV) metric specifically for SoFi Invest members, including its components.
  2. Calculate the LTV using historical data, considering average revenue per user (ARPU) and average customer lifespan.
  3. Decompose the LTV into its key drivers, such as transaction frequency, average transaction value, and retention rate.
  4. Identify potential strategies to increase LTV based on your findings.
  5. Propose metrics to monitor the effectiveness of these strategies over time.