Customer Lifetime Value (CLV)

Before I assign any new feature development work to my team, I talk to them about why we are adding the feature and how it'll benefit our customers. Last week, I spoke to them about Customer Lifetime Value (CLV) and how to calculate it.

There’s a direct relationship between the length of a time a customer invests in your business, and their value to your business. The longer they purchase from your business, the higher their customer lifetime value. We're going to add a CLV calculator in our membership plugin DigitalAccessPass.com (DAP) so our users don't have to calculate this number manually. 

As I was going over all the metrics that we need to calculate first, before even get to the lifetime value metrics, and how to calculate each one of these metrics, I thought it was important to share it with you as well.

CLV is a critical metric as it'll give you insight into how much a customer will spend over the course of their relationship with you and that will help you figure out how much you can afford to spend on customer acquisition and customer retention. This calculation is tricky as it's different for different types of products.

Take a listen to this episode to learn why CLV needs to be calculated at product level and how you can calculate CLV for different types of products - one-off, monthly subscription, annual subscription, free/paid trials, etc. 

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