CLV Calculator
Want to know how to calculate CLV?
CLV is a good indicator of how valuable an account is to your company, and is vital in understanding the revenue potential from individual customers.
(average revenue per customer / average customer lifespan) = CLV
What is CLV?
Customer Lifetime Value (CLV) is used to determine how much revenue can be expected from a client, or can measure the total revenue generated from a customer throughout their time with your company. This can be used to see how valuable an account is to your company, and to understand the revenue potential from individual customers. The longer your customers continue to purchase from your company, the higher their CLV becomes. Selling to your existing customers is much easier than acquiring new customers, so your CLV scores are crucial for evaluating your company’s trajectory for long-term success!
There are two types of CLV models: Predictive CLV and Historical CLV. The predictive CLV model does exactly what its name suggests – it predicts the buying behavior of your clients. This can be beneficial for you to identify your most valuable customers and how you can improve customer retention. The historical CLV model uses past data to predict your customer’s value during a specific period of time.
How to Calculate CLV
To calculate CLV, you can use the following formula:
Average Revenue per Customer x Average Customer Lifespan
This formula is the same for both predictive and historical CLV, simply use your estimated figures or past figures depending on which one you are calculating!
For example, if you generate an average revenue of $50 per customer per month, and your average customer lifespan is 24 months.
50 x 24 = $1200
To calculate CLV using Excel or Google Sheets, follow these three steps:
- Input the average revenue generated per customer in cell A1
- Input the average lifespan of your customers in cell A2
- In cell A3, input the formula (A1*A2)
