Estimate what a customer is worth in profit over their lifetime from order value, purchases a year, years kept and margin.
Enter purchase value, frequency, lifespan and margin.
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Multiply what a customer spends in a year by the years they stay, then keep only the margin. 40 per order, 6 orders a year, 3 years and a 50% margin gives 360 of lifetime profit.
CLV = order value × purchases per year × years × margin
Add your customer acquisition cost and the tool shows the ratio of lifetime value to it, a common check on whether acquiring customers pays.
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