Customer Lifetime Value (CLV) – a number your startup should know

Customer Lifetime Value - a number to know

Customer Lifetime Value (CLV) is a marketing term that is also important for startups to know.

CLV helps define the value of a customer & helps create a long-term mindset in terms of customer service, rather than a short-term mentality.

Not only that but customer lifetime value is very helpful when developing projections for your company and for investors to review.

CLV can be compared to your customer acquisition costs (you do know that number as well, right?) to help you determine if your marketing budget is aligned properly.

One formula for CLV is average monthly revenue per customer X gross margin (not net margin, so revenue - the cost of goods sold)/churn (or the percentage of customers you lose on a monthly basis).

 

Get my "Ultimate Guide to Funding a Business" on sale at Amazon! (click the image)

Leave a Reply

Your email address will not be published. Required fields are marked *