If you follow this blog on a regular basis, you know that we’re big believers in measuring customer lifetime value. Knowing your CLV is the key to effective marketing. If you know your customer lifetime value and your cost to acquire a customer, you know whether you have a profitable, scalable business or not. Segment these same numbers by customer acquisition source, channel, and ad placement, and you have a recipe for optimizing your marketing.
We’ve found that calculating customer lifetime value is one of the single biggest challenges digital marketers face. Companies tell us that they spend countless hours with SQL queries and spreadsheets or pay thousands of dollars to consultants.
So, we are releasing a free customer lifetime value calculator. This tool gives you a super-simple way to get a back-of-the-envelope estimate of your CLV by entering your average order value and repeat purchase rate (you do know what those are for your business, right?).
This tool certainly isn’t a substitute for doing a full analysis of your customer lifetime value based on your customer data. We’ve made some simplifying assumptions, but the tool will give a good estimate of CLV for most businesses.
Of course, if you want to have an always up-to-date, infinitely segmented view of your customer lifetime value you know where to go.