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How to use it

Using the Customer Lifetime Value Calculator

Step 1

Enter the average value of a single sale.

Step 2

Enter how many times a customer buys per year.

Step 3

Enter how many years they stay, to see lifetime value.

The detail

What this tells you

Customer lifetime value (CLV) is the total revenue you can expect from one customer across the whole relationship. Knowing it changes how you market: if a customer is worth $6,000 over four years, you can afford far more to win them than a single $500 sale suggests.

CLV sets a sensible ceiling on what you spend to acquire a customer. A healthy business keeps acquisition cost well below CLV. This estimate uses revenue, not profit, so apply your margin to judge true value.

FAQ

Customer Lifetime Value Calculator questions

Why does CLV matter for marketing?

It tells you how much you can afford to spend to win a customer. A higher CLV justifies a higher acquisition cost, which lets you outbid competitors who only look at the first sale.

How is CLV calculated here?

This tool multiplies average sale value by purchases per year by the number of years a customer stays. It is a revenue estimate, so apply your profit margin for a profit-based figure.

How do I increase CLV?

Improve retention, encourage repeat purchases, raise average order value, and deliver results that keep clients longer. Retention is usually cheaper than acquisition.

What is a good CLV to CAC ratio?

A common healthy benchmark is a 3:1 ratio of lifetime value to customer acquisition cost. Below that, acquisition may be eating your margins.

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