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Calculate CLV with multiple models, analyze customer segments, track cohorts, and optimize your acquisition strategy.
Customer Lifetime Value (CLV) is the total profit a business can expect to earn from a single customer over the entire duration of their relationship. It helps businesses understand how much they can afford to spend on customer acquisition and retention.
CLV = AOV x Purchase Frequency x Customer Lifespan x Gross Margin %Best for businesses with predictable purchase patterns and stable customer relationships.
CLV = Sum of (Annual Profit / (1 + Discount Rate)^year)Accounts for the time value of money using Net Present Value (NPV) calculations.
Uses probability models based on recency, frequency, and monetary value to predict future customer behavior.
A healthy CLV:CAC ratio is typically 3:1 or higher. This means your customer lifetime value should be at least 3 times your customer acquisition cost. If your ratio is lower, you may be spending too much on acquisition or not retaining customers long enough.
| Industry | Benchmark | Description |
|---|---|---|
| E-commerce (General) | $50-$200 | Average CLV for typical online stores |
| SaaS | $500-$5,000+ | High CLV due to recurring subscriptions |
| Subscription Services | $100-$500 | Moderate CLV with monthly/annual plans |
| Retail | $30-$150 | Lower CLV, one-time purchases |
| Luxury Brands | $500-$2,000+ | Premium pricing increases CLV |
| B2B Services | $1,000-$10,000+ | High-value customers, longer relationships |
Determine how much you can spend on customer acquisition while maintaining profitability.
Compare CLV of customers from different marketing channels to allocate budget effectively.
Identify high CLV customer segments and create targeted retention campaigns.
Understand long-term customer value to make informed pricing and discount decisions.
Calculate CLV for different customer segments (new vs returning, channel, product category) to identify your most valuable customers.
Increasing customer lifespan by 20% can increase CLV by 20%. Retention is often cheaper than acquisition.
Maintain a 3:1 CLV:CAC ratio minimum. If below, reduce acquisition costs or improve retention.
Recalculate CLV quarterly as purchase patterns, margins, and customer behavior evolve.