Customer Lifetime Value (CLV) Calculator
Understand the total revenue your business can expect from a single customer account.
Why CLV is a Game-Changing Metric
Customer Lifetime Value (CLV) tells you the total worth of a customer to your business over the entire period of their relationship. It’s a critical metric that shifts your focus from short-term gains to long-term, sustainable growth.
How to Use CLV in Your Strategy
Knowing your CLV allows you to make smarter decisions about marketing spend, customer acquisition, and retention efforts.
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1Acquisition Costs: Your CLV tells you how much you can afford to spend to acquire a new customer (Customer Acquisition Cost, or CAC) while remaining profitable.
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2Identify Best Customers: Segment your customers by CLV to identify your most valuable audience. You can then create lookalike audiences for ad campaigns or tailor marketing to these high-value groups.
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3Improve Retention: A low CLV often points to retention problems. It signals a need to invest in customer service, loyalty programs, and other strategies to keep customers coming back.
Frequently Asked Questions
Is this the only way to calculate CLV?
No, this is a simple, historical CLV calculation. More complex predictive models exist that incorporate churn rate and profit margins. However, this formula is an excellent and widely-used starting point for understanding customer value.
How can I increase my Customer Lifetime Value?
You can increase CLV by encouraging customers to buy more often (increasing purchase frequency), encouraging them to spend more per purchase (increasing average purchase value), or by keeping them as a customer for longer (increasing customer lifespan).