Customer Lifetime Value (CLTV) Calculator – Advanced Version
Customer Lifetime Value (CLTV) is the predicted total net profit a business expects to generate from a single customer over their entire relationship. It factors in revenue, costs, and customer lifespan to estimate the long-term value of acquiring and retaining customers.
How to use the Customer Lifetime Value calculator
Step 1: Enter the required values in the input fields marked with an asterisk. If an input field is not relevant to your business or you don’t have the data, enter 0.
Step 2: Click the “Calculate CLTV” button.
Step 3: Review the Customer Lifetime Value and other relevant metrics displayed.
CLTV - Google Sheets template
If you’d like to use a Google Sheets CLTV calculator template, you can get it here.
CLTV - Excel template
If you’d like to use an Excel CLTV calculator template, you can download it here.
Customer Lifetime Value formula
To manually calculate Customer Lifetime Value follow these steps:
Step 1 – Calculate Average Revenue per Customer (ARPC): Multiply the Average Purchase Value by the Purchase Frequency.
ARPC = Average Purchase Value × Purchase Frequency
Step 2 – Calculate Customer Value (CV): Multiply ARPC by the Customer Lifespan.
CV = ARPC × Customer Lifespan
Step 3 – Calculate Referral Value (RV): Divide the Referral Rate by 100 to convert it to a decimal, then multiply it by ARPC times the Customer Lifespan.
RV = (Referral Rate÷100) × ARPC × Customer Lifespan
Step 4 – Calculate CLTV: Add Customer Value (CV) and Referral Value (RV).
CLTV = CV + RV
Customer Lifetime Value calculator INPUTS and OUTPUTS
Average Purchase Value
Average Purchase Value represents the typical amount of money a customer spends in a single transaction with a business. Average Purchase Value provides insight into customer spending behavior and helps businesses understand the average value derived from each purchase, aiding in pricing and marketing strategies.
For example, consider a B2B Software as a Service (SaaS) company that provides project management software to businesses.
If the company has 50 clients in a month and generates $10,000 in total revenue from those clients, the average purchase value would be $200 ($10,000 divided by 50 clients).
This means, on average, each client spends $200 per transaction on the project management software subscription.
Purchase Frequency
Purchase Frequency is the average number of times a customer makes purchases from a business within a specific period, typically a year. Purchase Frequency helps businesses understand how often customers engage and repeat purchases, guiding strategies to encourage loyalty and increase revenue through repeat business.
For example, consider a B2B office supply company.
If a business purchases office supplies from them 12 times in a year, the purchase frequency for that customer would be 12.
This means the business makes, on average, one purchase per month from the office supply company.
Customer Lifespan
Customer Lifespan is the average duration a customer continues to engage with a business, making purchases or utilizing its services. Customer Lifespan provides insights into customer retention and helps businesses estimate the long-term value of acquiring and retaining customers, guiding strategies for customer relationship management and revenue forecasting.
For example, consider a B2B software company providing project management tools.
If a business subscribes to the software service for an average of 3 years before switching to a competitor or discontinuing the service, the customer lifespan for that business would be 3 years.
Referral Rate
Referral Rate is the percentage of customers who actively recommend a business’s products or services to others. It reflects customer satisfaction and loyalty, driving new customer acquisition through word-of-mouth marketing. A higher referral rate can significantly boost business growth and credibility.
For example, consider a B2B marketing agency that provides digital marketing services to businesses.
If the agency has 100 clients and 10 of those clients refer new businesses to them within a year, the referral rate would be 10%.
This means that 10% of the agency’s client base actively promotes their services to others, bringing in new clients through referrals.
Customer Lifetime Value (CLTV)
Customer Lifetime Value (CLTV) is the predicted total net profit a business expects to generate from a single customer over their entire relationship. It factors in revenue, costs, and customer lifespan to estimate the long-term value of acquiring and retaining customers.
For example, consider a B2B software company that provides cloud storage solutions to businesses.
If a business signs up for a monthly subscription plan and remains a customer for an average of three years, with a monthly subscription fee of $100, the customer lifetime value (CLTV) would be $3,600 ($100/month * 12 months * 3 years).
This means that, on average, this customer is expected to generate $3,600 for the company over their entire relationship.
Disclaimer: This Customer Lifetime Value (CLTV) calculator is provided for informational purposes only. The results generated by this calculator are estimates and may not reflect actual values. The calculator relies on assumptions and inputs provided by the user, and actual results may vary based on various factors not accounted for in the calculations. Users should exercise caution and consider consulting with financial professionals before making business decisions based on the results of this calculator. The creators of this calculator are not liable for any damages or losses resulting from the use of the calculator or reliance on its output.
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