Customer Lifetime Value (CLV)

Assessing and calculating your marketing/advertising R.O.I is vital to know which marketing campaigns yield you the best returns/highest profits.

Combine this with another key marketing strategy of effectively measuring and monitoring ALL of your marketing/advertising and you should have a very good idea of what’s working for you and equally as important what’s not working for you.

Following is a calculator to help you evaluate the ‘lifetime value’ of your average customer. This enables you to make decisions on how much you spend to acquire new customers:

Many businesses make decisions based on the one off cost and profit of a one-time sale customer, whereas CLV is based on the lifetime profit the customer is worth to the business.

Example based on Customer Lifetime Value:

You are a bus charter business and let us say your ‘average’ bus charter customer value is $350.00 and they buy from you once a year and remain an active customer for 5 years; we will assume your profit margin is 30%.

Your customer lifetime profit value will be

$350.00 x 5 x 30% = $525.00.

In this example you can see the profit on the average customer over their lifetime is $525.00 (minus customer retention costs) so when you do a marketing/advertising campaign you make your decision on how much to spend to acquire each new customer based on the $525.00 lifetime profit value (minus customer retention costs)

Enter your values in the calculator below and press 'Calculate' to view your results, press 'Clear' to calculate again.