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
2 thoughts on “Customer Lifetime Value 🥇”