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.

Are you disappointed in your CLV results? If so, you’re not alone. Many businesses are surprised when their business yields less-than-desirable CLV results.

But there are ways to improve this important metric.

Find ways to increase your customer retention rate
One of the biggest things to affect your customer lifetime value is how long they’re a customer and how frequently they make a purchase.

When you fail to retain customers and your retention rate is low, it means that customers aren’t sticking around long enough to positively impact your CLV.

To boost your CLV, you’ll want to brainstorm ways to increase your customer retention.

This could be something that’s unique to your company, like sending a free gift, or it could be something a bit more generalized like having better communication with your customers.

Any way you slice it, you should pay close attention to your retention rate if you want to have an impressive CLV.

Find ways to satisfy your customers
If you want customers to stick around and increase their customer lifetime value, it’s important to consider the different ways that you could boost their satisfaction.

If they get a monthly newsletter from your business, what’s a way that you could make that more exciting and beneficial to your customer? Would including a free sample of one of your products help?

Finding small ways to satisfy your customers can go a long way in retaining them, which in turn, can drastically boost their CLV.

WebFX is a full-service digital marketing agency that works with a variety of clients to improve their CLV and their revenue with top-notch marketing services.

We offer everything from SEO and PPC to video production and competitor geofencing.

We know the importance of your clients, and we know that its even more important to understand the value they provide your company.

To ensure that you don’t waste your marketing budget on clients who don’t return in revenue, determining and improving your customer lifetime value is a must.

If you’re disappointed in the results of your calculations, WebFX can help! We have a team of 200+ specialists who implement a wide range of strategies to help attract clients that will provide you with the most value.

If you’re ready to improve your CLV, contact us online or give us a call at 888-601-5359!