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Customer Lifetime Value (CLV) Calculator
Useful
Why it's useful to use
The Customer Lifetime Value (CLV) calculator is an essential tool for eCommerce entrepreneurs to understand the long-term value of each customer. By calculating CLV, you can estimate how much a customer will spend over their relationship with your brand. This insight helps you make informed decisions about marketing strategies, customer retention efforts, and resource allocation, ensuring that you invest wisely in building long-term customer relationships and maximizing profitability.
Formula
How the tool works
CLV is calculated by multiplying three key factors: the average order value (how much a customer spends on average), the purchase frequency (how often a customer makes a purchase per year), and the customer lifespan (how many years a customer continues to buy from your business). The result gives you the total revenue you can expect from a customer over their lifetime with your business. This metric is vital for determining how much you can afford to spend on customer acquisition while maintaining profitability.
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