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Inbound Marketing Blog

How To Calculate Your Customers' Lifetime Value

[fa icon="clock-o"] August 7, 2017 [fa icon="user"] Jo Shaer [fa icon="folder-open'] customer lifetime value

how-to-calculate-customer-lifetime-value-LTV.pngYour Customers' Lifetime Value (LTV)  is one of those metrics that keep your Finance Director up at night.

It’s the estimated revenue that a customer will generate during the entire span of their relationship with your company.

Precisely how it’s calculated depends upon your company’s business. A SaaS company will be different to a consulting firm or a widget manufacturer.

How to calculate your Customer Lifetime Value

Here is a quick back-of-the-envelope formula.

LTV = Average Value of a Sale x Average Number of Repeat Sales x Average Retention Time (Months or Years ) for a Typical Customer

Whatever formula your company uses, LTV provides a good indication of the maximum amount your company should invest in acquiring customers.

It's also a vital metric in working out how Inbound Marketing could skyrocket your revenue using our Inbound Revenue Calculator.

Click the image below to calculate your return on investment.

Inbound revenue calculator

 

Jo Shaer

Written by Jo Shaer

"You're not like other marketing agencies, are you?" Nope, and we're proud of it. No jargon, no BS. We build websites with TLC - Traffic, Leads & Customers. From small beginnings - as a part time lollipop lady designing websites in her back bedroom for the business owners she was seeing across the road - Jo Shaer has grown Lollipop to a limited company with its own office and 4 staff. She cares passionately about the success of your business. You can trust her to do the right thing, not the easy thing.

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