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Customer Lifetime Value

The Complete Guide to CLV

  • Welcome
    • About Geoff Fripp
    • Contact
    • Terms and Conditions
    • Privacy Policy
    • Disclaimer
  • About CLV
    • What is CLV?
    • Benefits of CLV
    • CLV and Brand Equity
    • Customer Profitabilty vs CLV
    • What is Customer Equity?
  • CLV Formulas
    • Simple CLV Formula
    • When to Use the Simple CLV Formula
    • For/Against of the Simple CLV formula
    • Main CLV Formula
    • Example CLV Calculation
    • Existing Customer CLV Formula
    • Formula for Existing vs new customers
    • The CLV Equation
    • Calculating WOM in CLV
    • Why use WOM in CLV
    • Calculating CLV for Banks
  • Customer Revenues
    • Increasing Revenue Over Time
    • Word-of-mouth Benefits
  • Customer Costs
    • Acquisition cost formula & examples
    • Examples of Acquisition Costs
    • Calculating WOM in CLV
    • Lapsed customers
    • Retention Costs
    • Retention Cost Formula
    • Acquisition vs Retention Costs
  • Retention
    • Retention Rate to Lifetime Period
    • Retention rate over time
    • From retention rate to average lifetime period
    • Customer lifetime with a changing retention rate
    • Retention rate should increase over time
    • CLV beyond 5 years
    • Does the average lifetime period make sense?
    • CRM and CLV
    • The Leaky Bucket Theory
  • Maximize CLV
    • Ways to Increase Revenues
    • Key Marketing Goals
    • Increasing the Lifetime Period
    • Balance and Budgets
    • Word-of-mouth value
    • The Leaky Bucket Theory
    • CLV or Marketing ROI?
  • Financial Issues
    • Financial Metrics
    • ROI and CLV
    • CLV better than Marketing ROI?
    • A maximum CLV period?
    • Lapsed or new customers?
    • Reconciling CLV with Total Profits
  • Discount Rates
    • Role of the Discount Rate
    • What Discount Rate to Use?
    • Using Different Discount Rates
  • Videos
  • Calculators
    • Quick CLV Calculator
    • Full CLV Calculator
  • Customer Equity
    • What is Customer Equity?
    • Calculating Customer Equity: Free Excel Template
    • Customer Journey Mapping (CJM)
  • Free CLV Template

How to Maximize CLV

 We have measured CLV – now what?

The best way to think about how to maximize CLV (customer lifetime value) is to decompose the CLV formula into its core elements, which are:

  • Acquisition costs
  • Customer revenue streams
  • Customer costs to provide the revenue generating products/services
  • Customer up-sell and retention costs
  • Retention rate (customer lifetime period)
  • Acquisition cost savings through referrals and WOM

 

 

All material copyright (2015-20) and for educational purposes only.

Download the Free Excel CLV Template

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Customer Lifetime Value

This website is designed to help you understand the more detailed aspects of calculating customer lifetime value (commonly abbreviated to CLV or CLTV) and using it to improve marketing performance.

This website is designed to be quite comprehensive for marketers and university students looking for a better understanding of customer lifetime value (CLV).

  • Welcome
    • About Geoff Fripp
    • Contact
    • Terms and Conditions
    • Privacy Policy
    • Disclaimer
  • About CLV
    • What is CLV?
    • Benefits of CLV
    • CLV and Brand Equity
    • Customer Profitabilty vs CLV
    • What is Customer Equity?
  • CLV Formulas
    • Simple CLV Formula
    • When to Use the Simple CLV Formula
    • For/Against of the Simple CLV formula
    • Main CLV Formula
    • Example CLV Calculation
    • Existing Customer CLV Formula
    • Formula for Existing vs new customers
    • The CLV Equation
    • Calculating WOM in CLV
    • Why use WOM in CLV
    • Calculating CLV for Banks
  • Customer Revenues
    • Increasing Revenue Over Time
    • Word-of-mouth Benefits
  • Customer Costs
    • Acquisition cost formula & examples
    • Examples of Acquisition Costs
    • Calculating WOM in CLV
    • Lapsed customers
    • Retention Costs
    • Retention Cost Formula
    • Acquisition vs Retention Costs
  • Retention
    • Retention Rate to Lifetime Period
    • Retention rate over time
    • From retention rate to average lifetime period
    • Customer lifetime with a changing retention rate
    • Retention rate should increase over time
    • CLV beyond 5 years
    • Does the average lifetime period make sense?
    • CRM and CLV
    • The Leaky Bucket Theory
  • Maximize CLV
    • Ways to Increase Revenues
    • Key Marketing Goals
    • Increasing the Lifetime Period
    • Balance and Budgets
    • Word-of-mouth value
    • The Leaky Bucket Theory
    • CLV or Marketing ROI?
  • Financial Issues
    • Financial Metrics
    • ROI and CLV
    • CLV better than Marketing ROI?
    • A maximum CLV period?
    • Lapsed or new customers?
    • Reconciling CLV with Total Profits
  • Discount Rates
    • Role of the Discount Rate
    • What Discount Rate to Use?
    • Using Different Discount Rates
  • Videos
  • Calculators
    • Quick CLV Calculator
    • Full CLV Calculator
  • Customer Equity
    • What is Customer Equity?
    • Calculating Customer Equity: Free Excel Template
    • Customer Journey Mapping (CJM)
  • Free CLV Template
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