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Quick & Easy Customer Lifetime Value Formula

by sbc383stroker
3 replies
Hello Marketers!
I've been tirelessly searching for a proven CLV calculator. All the formulas I come across give me different values or aren't clear enough in their directions to produce a reliable result. I'm trying to calculate CLV for a digital marketing agency. Can any of you, please share a proven & well explained CLV formula?
Thank you!
#customer #easy #formula #lifetime #quick
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  • Profile picture of the author DABK
    Average purchase price x average number of purchases per year x average retention time.

    If your average purchase price is $20 and

    And on average your customers purchase from you 5 times a year

    And, on average, your customers stay with you for 7 years

    You end up with this

    20x5x7=700.

    Life time value of your customer is $700.

    Originally Posted by sbc383stroker View Post

    Hello Marketers!
    I've been tirelessly searching for a proven CLV calculator. All the formulas I come across give me different values or aren't clear enough in their directions to produce a reliable result. I'm trying to calculate CLV for a digital marketing agency. Can any of you, please share a proven & well explained CLV formula?
    Thank you!
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  • Profile picture of the author Monetize
    Originally Posted by sbc383stroker View Post

    Hello Marketers!
    I've been tirelessly searching for a proven CLV calculator. All the formulas I come across give me different values or aren't clear enough in their directions to produce a reliable result. I'm trying to calculate CLV for a digital marketing agency. Can any of you, please share a proven & well explained CLV formula?
    Thank you!

    Why are you offering this service to a digital marketing company.
    Did they ask you for this information or was that your idea?

    Digital marketing has too many variables to project an accurate
    customer lifetime valuation, so you should accept the fact that
    it cannot be done and stop frustrating about it.

    Take a membership site, for example - You have no way of knowing
    how long a person is going to continue their subscription. The hope
    is that once they sign up for autopay, they will forget about it and not
    cancel but there is no way to be certain about anything.

    It is impossible to know how long an online customer will be retained
    and all these calculators are just estimates anyway.

    If I were you, I would find other information to sell to this client.
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    • Profile picture of the author DABK
      If you've been in business a while, you can calculate.


      They are estimates, but useful ones.


      Originally Posted by Monetize View Post

      Why are you offering this service to a digital marketing company.
      Did they ask you for this information or was that your idea?

      Digital marketing has too many variables to project an accurate
      customer lifetime valuation, so you should accept the fact that
      it cannot be done and stop frustrating about it.

      Take a membership site, for example - You have no way of knowing
      how long a person is going to continue their subscription. The hope
      is that once they sign up for autopay, they will forget about it and not
      cancel but there is no way to be certain about anything.

      It is impossible to know how long an online customer will be retained
      and all these calculators are just estimates anyway.

      If I were you, I would find other information to sell to this client.
      {{ DiscussionBoard.errors[11677346].message }}
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