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Customer Lifetime Value
Calculator (CLTV)

The Customer Lifetime Value (CLTV) is a crucial metric that calculates the total revenue a business can expect from a single customer account throughout the business relationship. It helps businesses make data-driven decisions about customer acquisition and retention strategies.

Why is it important to know CLTV?

  • Optimize Customer Acquisition: Understanding CLTV helps determine how much you can spend on acquiring new customers while maintaining profitability.
  • Improve Customer Retention: By knowing the potential value of customers, you can make informed decisions about retention strategies and customer service investments.
  • Segment Customers: CLTV helps identify your most valuable customer segments, allowing for more targeted marketing and personalized service approaches.
  • Financial Planning: Accurate CLTV projections support better budgeting, forecasting, and strategic planning for your business growth.

Customer Lifetime Value Calculator

Calculate the total value a customer brings to your business over time

Do not have CAC Details? Use CAC Calculator

How to Calculate Customer Lifetime Value (CLTV) Effectively

Step-by-Step Calculation Guide

  1. 1
    Calculate Average Purchase Value

    Determine the average amount spent by a customer per purchase. This can be calculated by dividing total revenue by the number of purchases.

  2. 2
    Calculate Average Purchase Frequency Rate

    This is the average number of times a customer makes a purchase in a given period. It is calculated by dividing the number of purchases by the number of unique customers.

  3. 3
    Calculate Customer Value

    Multiply the average purchase value by the average purchase frequency rate to get the customer value.

  4. 4
    Calculate Average Customer Lifespan

    Estimate the average number of years a customer continues to purchase from your business.

  5. 5
    Calculate CLTV

    Multiply the customer value by the average customer lifespan to get the Customer Lifetime Value.

Understanding Your Results

  • Total CLTV

    This represents the net profit you can expect from a customer over the entire relationship period. A higher CLTV indicates a more valuable customer relationship.

  • Monthly Value

    Use this for monthly revenue forecasting, cash flow planning, and setting short-term customer retention goals.

  • Yearly Value

    Helpful for annual budgeting, setting sales targets, and evaluating long-term business strategies.

  • CLTV:CAC Ratio

    Aim for a ratio of 3:1 or higher - this means your customer value is three times your acquisition cost, indicating a healthy business model.

Frequently Asked Questions

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