Customer Lifetime Value Calculator

Wondering how to calculate customer lifetime value on your own? We’ve got you covered. Just use this simple CLV formula:

CLV = (Revenue from a single customer over their lifetime) - (The cost of acquiring them)

If you’re not sure how much a customer has spent over their lifetime with your business, you can use this customer lifetime value calculation instead:

CLV = (Average annual revenue from a single customer) X (Number of years) - (Customer acquisition cost for that customer only)

CLV is an extremely important metric — and if you calculate it incorrectly, it could affect your campaign immensely.

For example, if you’re too busy to handle all of your current clients, and you’re in the process of recommending some of your low-value clients to a partner business, miscalculation can lead to a huge loss for your company.

When you use a customer lifetime value calculator, you’ll get a fast, easy answer to the question, “How valuable are my clients?”

Better yet, you won’t have to worry about miscalculations that could greatly affect your business.

Here are a few specific benefits of using WebFX’s CLV calculator:

It’s fast
As a business owner, we know that you don’t have time to waste. That’s why we’ve created a CLV calculator that gives you immediate results.

You won’t have to worry about filling out contact info or giving us your email address — just plug in your numbers and get your results.

It’s free
We know that CLV is such a beneficial and important metric that we wanted to provide it to businesses for free. We want you to have all the information you need to create a successful campaign.

It’s accurate
You won’t have to double check our math — our developers have created a calculator that’s accurate every time. We promise!

Are you on the fence about whether or not CLV is an important metric to your business? If you fit the following criteria, a CLV calculator could be beneficial to you.

You’re concerned about your customer acquisition cost
Are you sinking a lot of money into your marketing budget and not receiving a lot in return? When you use a CLV calculator to figure out the customer lifetime value of each client, you can start to spot where you might be overspending.

For example, you might find that you spent $25 per week for a month in pay-per-click (PPC) ads, just to convert a customer that only has a lifetime value of $250.

Depending on your business model, this may or may not be worth the budget spend, but it’s best to use a customer lifetime value calculator to maximize your marketing spend.

You should aim to have a CLV that helps you earn an impressive revenue, even with customer acquisition costs added in.

How do you accomplish that?

Determine your CLV with a customer lifetime value calculator to determine what is appropriate to spend on marketing and advertising to keep your revenue strong.

You have a lot of clients, but your revenue isn’t impressive
Similar to having concerns about your customer acquisition cost, you might be worried that you have a lot of clients, but your revenue year over year isn’t that impressive.

This can mean one of two things — your high number of clients don’t stick around for long, or you overspend when it comes to marketing.

If your client retention rate is low, meaning that clients get on board with your business but then jump ship, you need to evaluate your CLV. For a customer like this, you’ll find that their CLV is extremely low, meaning that you probably shouldn’t take them on as a client in the first place.

You might also find that you have a lot of clients, but your revenue is low because you’re spending everything you make on marketing.

You could benefit by using a CLV calculator to determine just how much is appropriate to spend on marketing when compared to your overall revenue.

When you use a customer lifetime value calculator, you’ll be able to determine a certain client profile that is likely to have a low CLV in the future. From this, you’ll be able to determine what kind of clients aren’t going to provide a high CLV and avoid taking them on in the future.

You’ll also be able to determine how much marketing budget you have compared to how much your target audience spends with your company.

You want to check on the health of your marketing campaigns
Any business, successful or not, can benefit from using a customer lifetime value calculator just to gain insight into the health of your marketing campaigns.

If you have a lot of clients with a high customer lifetime value, it means that you’re doing something right.

CLV can also help you understand if you’re spending the right amount on marketing and advertising and if you need to cut back.

Improve customer lifetime value with strategies like the following:

1. Create demand by pointing out necessities
Customers are more likely to act when a product appears necessary. For instance, imagine you own a technology ecommerce website, and one of your customers has bought a smartphone. You could present them with a great protective cover or another related product. Make it a sweet deal by giving a small discount for bundling. Most big ecommerce brands like Amazon use this method of upselling to capitalize on each individual sale.

2. Put your customers in the spotlight
Everyone loves a bit of recognition, so put your customers in the spotlight. Feature winners on your social media profiles, and share photos and comments from your customers on your main page.

3. Be sensitive to customers’ needs
Customers want to know that your company cares about their needs. Give them the chance to speak out about it – and don’t wait for nasty emails to start solving customer service problems. Instead, attend to customers’ needs on every social media channel and online outlet your company uses. This will help build loyalty and improve your customer lifetime value.

4. Give customers a reason to celebrate
A great way to achieve this is by packaging your products according to the season. If you’re running a fashion website, for example, change the themes accordingly by including a U.S. Flag for Independence Day and a spooky haunted house during Halloween. Small details like these can help make your brand more likeable, so customize your website and products throughout the year.

5. Make doing business convenient
Customers like getting errands done quickly. Therefore, you should make performing tasks like making purchases on your site easier by storing previous customer information. This will save customers from filling out the same mundane details before every purchase.

6. Concentrate on quality
Making your products epic is the best tactic for outpacing competitors and increasing customer lifetime value. There’s no doubt that making your brand synonymous with quality is essential. Being a source of reliable products can create a fan frenzy that catapults your sales.

7. Know your customers
Being knowledgeable about your loyal customers is essential, and so is letting them know that you care. If you own a subscription website, ensure that you collect personal information like birthdays and anniversary dates. On that particular day, you can present them with a small discount or free goodie.

8. Give delightful surprises
Delighting your customers with excellent customer service on a regular basis is a must, but small surprises can also help. Customers will react positively to surprises like free shipping, thank you notes, retweets, birthday coupons, and postcards.

9. Personalize the shopping experience
Personalizing your ecommerce website can improve the shopping experience and increase sales, which will have a positive impact on your customer lifetime value.

10. Go beyond standard product details
Many customers complain that they can’t try on shoes or clothes when they buy them online. That’s why many brands have now devised tools and ways to explain fit in great detail, and allow other customers to chime in.

11. Follow through on delivery promises
Customers are never happy when their purchases don’t arrive on time, so give them peace of mind by allowing delivery tracking. Let them change delivery dates or even allow their neighbors to receive the packages.

12. Allow for multi-channel returns
Even though multi-channel returns can create an inventory nightmare, offering them can be a great way to encourage sales. If they wish to return an item manually, pave the way for it.

13. Reward customer loyalty
Loyal customers should receive some incentive to keep choosing your business over and over. Consider a customer loyalty program where you reward customers for spending milestones.

14. Design programs for frequent buyers
Having special membership programs available for recurrent customers can work wonders in improving LTV. Customers can expect benefits like free delivery and unlimited product access for a yearly fee.

15. Get customers to register
Encourage customers to register for your website. When customers register, you’ll be able to track their behavior and spending habits more closely. In exchange, making purchases and filling in payment data will become easier for them, too.

16. Show your appreciation
Taking the time to appreciate each sale will pay off on customer lifetime value. Send your customers a quick thank you note with every purchase, and if they’re a first-time buyer, send a nice welcome email and link to your website’s registration platform.

17. Provide exclusive offers
Providing certain special deals only to social media followers or email subscribers is a great way to make them feel special. Exclusive offers can act as inducers for persuading customers to buy from you again and again.

18. Create coalition programs
Coalition programs are unique partnerships where companies group together to benefit their customers. This tactic can be useful in giving customers something they like apart from what you sell.

19. Motivate purchases with urgency
Building a sense of urgency can be effective in motivating customers’ buying behavior. Deals lasting no more than 24 hours can be real winners, especially if you notify existing customers about them through email or on social media.

20. Encourage long-term subscriptions
If customers have been with you for a couple of months and are paying monthly dues, ask them to go for annual subscriptions that work out cheaper. In doing so, you’ll get them to agree to stick around for a longer term.

Optimize your customer lifetime value with WebFX, an award-winning digital marketing agency that delivers tech-enabled solutions for helping businesses capture more revenue from the web. With RevenueCloudFX (which is exclusive to clients), companies can:

• Measure marketing’s impact across any sales cycle
• Lower cost-per-lead in the first six months
• Get the expertise of more than 500+ experts across marketing, martech, website design, and more

Discover what’s possible for your business and its revenue performance by contacting us online today!

Customer lifetime value is important because it’s more expensive to acquire a new customer than to retain an existing one. Businesses can also use CLV to inform marketing strategies by understanding if certain channels attract clients that are more likely to stick than others.

Reevaluate your customer lifetime value quarterly or whenever your business undergoes a significant change, like launching a new product or changing customer benefits.