Customer Lifetime Value Calculator
This customer lifetime value (CLV) calculator uses the details you give to estimate how much a customer might be worth over time.
For tailored strategic guidance, reach out for a consultation. We’re always ready to help you understand CLV trends and find opportunities to improve retention and lifetime value.
What is customer lifetime value (CLV)?
Customer lifetime value (CLV) is a prediction of the total revenue a business can expect from a single customer over the entire lifespan of their relationship. CLV helps businesses understand the long-term value of their customers.
How is customer lifetime value (CLV) calculated?
Businesses can calculate customer lifetime value using the customer lifetime value formula: (Average Order Value x Purchase Frequency) x Average Customer Lifespan x Profit Margin. To calculate CLV, you need to know the average purchase value, how often customers purchase, how long they remain customers, and your profit margins.
What goes into the customer lifetime value formula?
The key elements of the customer lifetime value formula are average purchase value, purchase frequency rate, average customer lifespan, and profit margins. Businesses need to analyze historical customer data to determine average values to input into the CLV formula.
Why is understanding customer lifetime value (CLV) important?
Knowing your customer lifetime value is crucial for making informed marketing and growth decisions. CLV helps you determine how much to spend on acquiring new customers and retaining existing ones. Businesses with higher CLVs can justify spending more on customer acquisition.
How can you use CLV to improve your business?
Once you calculate CLV, you can target high-value customer segments and optimize your messaging and offers to boost retention and loyalty. Understanding customer lifetime value will help you focus your efforts on the strategies that maximize the value of your customer base over their entire lifecycle.