Ecomculator

Customer Lifetime Value Calculator

Calculate how much revenue a customer will generate throughout their relationship with your business and make data-driven decisions about acquisition and retention.

Customer Lifetime Value Calculator

Calculate how much revenue a customer will generate throughout their relationship with your business.

Basic CLTV

$0

Simple CLTV based on purchase value, frequency, and lifespan

Advanced CLTV

$0

CLTV accounting for retention and discount rates

Net CLTV

$0

CLTV minus acquisition cost

ROI

0%

Return on investment from customer acquisition

CLTV Analysis

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Updated: February 2024
Results are estimates based on industry averages and may vary.

Understanding Customer Lifetime Value

Customer Lifetime Value (CLTV) is a crucial metric that helps businesses understand the long-term value of their customer relationships. By calculating CLTV, you can make informed decisions about customer acquisition spending, retention strategies, and overall business growth.

Key Components of CLTV

  • Average Purchase Value: The typical amount a customer spends per transaction
  • Purchase Frequency: How often a customer makes purchases
  • Customer Lifespan: How long a customer continues to purchase from you
  • Gross Margin: The profit percentage on each sale
  • Retention Rate: The percentage of customers who continue buying over time

Using CLTV in Your Business

1. Customer Acquisition

Use CLTV to set appropriate customer acquisition budgets and ensure profitable customer relationships.

2. Customer Segmentation

Identify your most valuable customer segments and tailor your marketing and retention efforts accordingly.

3. Retention Strategy

Develop targeted retention programs based on customer value and potential lifetime revenue.

4. Growth Planning

Use CLTV projections to forecast revenue and plan strategic investments in customer relationships.

Frequently Asked Questions About Customer Lifetime Value

Get answers to common questions about calculating and improving customer lifetime value.

Customer Lifetime Value (CLTV) is a prediction of the total revenue a business can expect from a customer throughout their entire relationship. It considers factors like purchase frequency, average order value, customer lifespan, and retention rates.
The basic CLTV calculation is simpler and based on historical purchase patterns (frequency × value × lifespan). The advanced calculation incorporates retention rates and time value of money, making it more accurate for subscription businesses or long-term customer relationships.
A friction score below 15 is excellent, 15-25 is good, 25-35 is average, and above 35 indicates high friction. The score is calculated based on field count and completion time, with each field adding 1.5 points and every 10 seconds adding 1 point.
A healthy CLTV to Customer Acquisition Cost (CAC) ratio should be at least 3:1, meaning you earn $3 for every $1 spent on acquisition. The ideal ratio is 5:1 or higher. Ratios below 2:1 may indicate profitability issues.
To improve CLTV: 1) Increase purchase frequency through engagement and loyalty programs, 2) Raise average order value through upselling and cross-selling, 3) Extend customer lifespan with better retention strategies, 4) Improve gross margins through operational efficiency, 5) Reduce customer acquisition costs through targeted marketing.
Calculate CLTV quarterly or when significant changes occur in your business model, pricing, or customer behavior. Regular monitoring helps identify trends and the impact of customer retention initiatives.
Gross CLTV is the total expected revenue from a customer before subtracting acquisition costs. Net CLTV subtracts the customer acquisition cost (CAC) to show the true profitability of each customer relationship.

Ready to Grow Your Customer Value?

Learn proven strategies to increase customer lifetime value in our comprehensive guide.

Read Customer Lifetime Value Guide