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## Why Customer Equity is a Powerful Marketing Metric

Customer equity is the total of all customer lifetime values of both current and future customers (please refer to this article for more information on how it is calculated). This means that customer equity is a single measure of all future profits (on a discounted basis) that will be generated by the firm’s (or brand’s) […]

Defining Customer Equity Customer equity is the sum of all customer lifetime values for a firm. In other words, we calculate each customer’s lifetime value and we total all of these values together to determine customer equity. Customer equity, therefore, is the total expected profitability to be generated from a customer base over time.It is […]

## Free Excel Template for Calculating Customer Equity

You can download the free template here…customer equity template Below is an information video – but also see What is Customer Equity? and Why it is a powerful marketing metric.

Using CLV to determine Marketing ROI Let’s assume that: the average customer acquisition cost for a company is $100 the average annual profit for this customer cohort is $60 and the average customer lifetime is three years. The firm determines that the profit contribution is $180 before consideration of the initial acquisition cost (which means […]

## Great Article on CLV for Mobil Apps

evus TECHNOLOGIES has a great article on various ways of measuring and tracking the performance of a mobile app. They review 50 different KPIs (key performance indicators) that are relevant to mobile app metrics, including a look at customer lifetime value, retention rate, and customer acquisition cost. So if you have a special interest in […]

One of the major impacts on overall customer lifetime value (CLV) is the firm’s ability to retain customers. An increased loyalty rate can substantially increase the average lifetime period of the customer, resulting in a significant increase in customer lifetime value. However, it is unlikely that any cohort of customers will have a static retention […]

## Customer lifetime value – does the average lifetime period make sense?

Perhaps one of the confusing aspects of calculating customer lifetime value (CLV) is working out the average period that a customer purchases from the firm/brand. Sometimes it seems inconsistent with the percentage of customers retained. In this article, we will work through why this sometimes seems to be an inconsistency. For this example we will […]

## Using the retention rate to calculate average lifetime period

When calculating customer lifetime value (CLV), one of the key inputs is the number of years that the average customer will purchase from the firm. This is surprisingly easy to calculate if you know the loyalty/retention rate of customers. The formula for average lifetime period of customers is simply 1/(1-retention rate). You should know that […]

## Existing Customer CLV Formula

A fairly standard CLV formula that you will find for measuring the lifetime value of existing customers is: CLV = m.r/1+d-r Where m = customer margin (or profit contribution) per year Where d = discount rate And r = retention/loyalty rate per year Important note: This formula is designed to measure the customer lifetime value of […]