Customer Lifetime Value 🥇

and estimate of total amount of money a customer will ever spend with your business

a pack of fries costs $5

once Jenny becomes your customer, she will buy at least once every week

if Jenny lives in the same neighbourhood for the next 5 years

80% of all her purchases will be made in the first year (20% of the time window)

that’s 12months x 4 weeks = 48 purchases

CLV for your fries business is 48*5 = $240

ignore the other 20% 

for a second just feel how good it feels to ignore things 

Now, if you spend $40 to acquire 1 customer like Jenny you will gross $200 per customer

at 40% margin you will net $120 per customer in the next year

the CLV of 1 customer for your fries business is $120

Published by Usman Gondal

https://www.linkedin.com/in/uag/

2 thoughts on “Customer Lifetime Value 🥇

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