## 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…

## Main CLV Formula

Let’s look at the main CLV formula is two ways – the first way in words and then as a CLV equation (see separate article on another one of my websites). As you will see, the main customer lifetime value formula is an extension of the simple CLV formula. The main changes are that the … Read more…

## The average lifetime of a customer

Customer lifetime value has three main components: The acquisition cost of customer The annual profit of customer And the lifetime of the customer to the firm The average lifetime of a customer The final component in the customer lifetime value calculation is to work out the average length of customer’s relationship with the firm … Read more…

## The annual profit of a customer in CLV

Customer lifetime value has three main components: The acquisition cost of customer The annual profit of customer And the lifetime of the customer to the firm The annual profit of a customer The main component of the customer lifetime value formula is an understanding of what profitability is generated from each individual customer on … Read more…

## Customer Acquisition Costs

The calculation for customer lifetime value has three main components: The acquisition cost of customer The annual profit of customer And the lifetime of the customer to the firm Customer acquisition costs This is the amount of money it costs, on a per customer basis, to attract a first-time customer. Acquisition costs are calculated … Read more…

## Difference between Marketing and Financial Goals

Marketing strategy is designed to deliver short-term financial and marketing goals and to build and strengthen the firm’s competitive advantages over time. A firm that has significant competitive advantages will enjoy greater profitability and stability of performance. Difference between short and long-term marketing goals Marketing strategy is expected to deliver short-term (usually within one … Read more…

## How to calculate a customer’s lifetime in years

A key aspect in the customer lifetime value (CLV) calculation is time spent as a customer – commonly referred to as the customer’s lifetime. When we refer to the customer’s lifetime in a marketing context, we are considering the average length of time a consumer is a customer of the brand or a firm. … Read more…

## Using the free Customer Lifetime Value (CLV) template – VIDEO

This website has a free Excel spreadsheet template that can enable to quickly calculate customer lifetime value for your university assignment or for your firm. Go here to download the customer lifetime value template. There are also step by step instructions on the spreadsheet as well as on website – please see using the … Read more…