Difference between Up-selling and Cross-selling

Up-selling and cross-selling are important aspects of building customer relationships and increasing customer lifetime value. Primarily they are both sales functions, but can occur with direct and digital marketing techniques as well. What is up-selling? Up-selling is changing the consumer’s decision from a lower  priced product to a higher priced product. In other words, the … Read more…

Quick Online CLV Calculator

Free online CLV calculator The following free online CLV calculator is ideal for quick calculations of customer lifetime value. If you need a more detailed calculation of customer lifetime value, please download the free Excel template for calculating customer lifetime value. How use the free online CLV calculator You only need to enter three numbers … Read more…

Full CLV Calculator (with Financials)

How to Use the Full CLV Calculator You only need to enter four numbers – please only type over the numbers in the white cells – the numbers in the orange cells are automatically calculated for you. To calculate the customer lifetime value, you will need to enter: Average customer acquisition costs Average customer profit … Read more…

The Role of the Discount Rate in CLV

What does a discount rate do? Discount rate converts future cash flows (that is revenue/profits) into today’s money for the firm. For example, if you put $100 into a bank account today that have 10% interest, then in 12 months’ time you would have $110 in the bank. In this case, $110 next year is … Read more…

Financial Metrics for CLV

Understanding the financial metrics for customer lifetime value The full customer lifetime value calculator and the free Excel CLV template both provide a summary outcome for several related financial metrics. Please refer to the image below of the full CLV calculator. As you can see, at the bottom, there are multiple financial metrics listed, including: … Read more…

The Leaky Bucket Theory

The Leaky Bucket Theory or Analogy? The leaky bucket theory is more of an analogy than a theory. It is used because it is a nice and simple way of understanding the concept of customer relationship management and how to increase customer lifetime value. The theory uses a bucket that has several holes in the … Read more…