What is the Lifetime Value of a Customer?

Before doing any marketing, it’s worth knowing the value of a typical customer. It’s OK spending $1,000 to get a customer if they’re worth $5,000 to you, but not if they’re only worth $500 over the long run.

Lifetime Value of a Customer
ADollar Amount of Average Sale
BNo. of Sales per Year
CNo. of Years a Customer
DAdditional Customer Referrals per Year
E% of Referrals Who Become Customers
FGross Sales per Year per Customer (A x B)$0
GGross Sales Over Lifetime (F x C)$0
HNew Customers Annually from Referrals0.0
ILifetime Sales from Referrals (H x C x G)$0
JTotal Value of a Loyal Customer (I + G)$0

A: The average amount spent per visit by a customer
B: Average number of sales/visits per year for a single customer
C: The average length of time (in years) that a customer stays with you
D, E: Estimate the typical number of people that a customer might refer to you per year, and then a percentage figure for the number of those referrals who actually become customers.

Click “Calculate Lifetime Value”