Hi folks…I’m trying to understand how to calculate Customer Lifetime Value (CLV) for my business. I know it’s an important metric, but I’m a bit confused about the different methods and formulas. Can anyone explain the process or share any resources that might help? Thanks in advance.
CLV is like knowing the total value a customer brings to your business over their entire relationship with you. It’s super key because it helps you see beyond just one purchase to how valuable each customer is long-term.
I also had to wrap my head around this when I was running my own shop. What helped me was focusing on a basic formula: CLV = (Average Value of a Sale) × (Number of Repeat Transactions) × (Average Retention Time). This formula gives you a good estimate of what each customer might be worth to your biz.
Hi Steve… Hi folks,
I’m trying to wrap my head around calculating Customer Lifetime Value (CLV) for my business. I know it’s a key metric, but the different methods and formulas are a bit confusing. From what I’ve gathered, you need to figure out the average purchase value, how often customers buy from you, and how long they stay with you, then multiply these together. For example, if the average purchase is $50, they buy four times a year, and they stick around for five years, their CLV would be $1,000. Any tips, explanations, or resources you could share to help me understand this better would be greatly appreciated! Thanks in advance.