Know-How Exchange : E-Marketing

There may not be a "proven CLV" because the world is dynamic and the CONCEPT of CLV is what's important, not some calculated value. Further, a formula that is "quick and easy" isn't likely to yield a reliable and repeatable result; the concept of CLV has many moveable parts, and the actual value is likely to change over time -- perhaps significantly.

Competition, interest rates, prevailing industry rate-of-return, new management directions, promotion effectiveness, retention rate, corporate goals, market volatility, and dozens of other factors are all unknowns that must be taken into account. The actual result of a calculation today is probably not worth the time and effort the calculation will take.

Make a few simple assumptions about how stable the world will be and go with that. (You'll be wrong, of course, but you can at least illustrate the concept.)

Lots of key, keen, expert insight from Michael (as usual).

What will you do with your findings? How will these data help you?

Following steps to calculating customers lifetime value
Step: 1 Average customer lifespan.
Step: 2 Calculate the average purchase value
Step: 3 Calculate the average frequency purchase rate
Step: 4 Calculate the customer value
Step: 5 Calculate the average customer lifespan
Step: 6 Multiply the customer value and the average customer lifespan together.
These steps are helpful to calculate Customer lifetime value in their life cycle with you.