### Question

Topic: E-Marketing

## Quick & Easy Customer Lifetime Value Formula

Posted by alex94vides on 250 Points
Hello Marketers!
I've been tirelessly searching for a proven CLV calculator. All the formulas I come across give me different values or aren't clear enough in their directions to produce a reliable result. I'm trying to calculate CLV for a digital marketing agency. Can any of you, please share a proven & well explained CLV formula?
Thank you!

### RESPONSES

• Posted by mgoodman on Accepted
There may not be a "proven CLV" because the world is dynamic and the CONCEPT of CLV is what's important, not some calculated value. Further, a formula that is "quick and easy" isn't likely to yield a reliable and repeatable result; the concept of CLV has many moveable parts, and the actual value is likely to change over time -- perhaps significantly.

Competition, interest rates, prevailing industry rate-of-return, new management directions, promotion effectiveness, retention rate, corporate goals, market volatility, and dozens of other factors are all unknowns that must be taken into account. The actual result of a calculation today is probably not worth the time and effort the calculation will take.

Make a few simple assumptions about how stable the world will be and go with that. (You'll be wrong, of course, but you can at least illustrate the concept.)
• Posted by Gary Bloomer on Accepted
Lots of key, keen, expert insight from Michael (as usual).

• Posted by martinclave21 on Accepted
Following steps to calculating customers lifetime value
Step: 1 Average customer lifespan.
Step: 2 Calculate the average purchase value
Step: 3 Calculate the average frequency purchase rate
Step: 4 Calculate the customer value
Step: 5 Calculate the average customer lifespan
Step: 6 Multiply the customer value and the average customer lifespan together.
These steps are helpful to calculate Customer lifetime value in their life cycle with you.
• Posted by Shelley Ryan on Moderator
Hi Everyone,

I am closing this question since there hasn't been much recent activity.

Thanks for participating!

Shelley
MarketingProfs