Customer Lifetime Value Calculator

Quickly and accurately determine how much revenue your customer's will bring you with this super easy, free customer lifetime value calculator. To get started, simply fill in this short form below and my robots will give you an estimate instantly.

What is the formula for calculating CLV?

Customer Lifetime Value (CLV) is the total amount of money you can expect to earn from a customer throughout their relationship with your business. The formula for calculating CLV is simple but extremely powerful:

CLV = Average Purchase Value x Purchase Frequency x Customer Lifespan x Profit Margin (%)

Here's how it works:

Average Purchase Value: The average amount of money a customer spends per transaction.
Purchase Frequency: How often a customer buys from you in a year.
Customer Lifespan: The number of years the customer remains loyal to your business.
Profit Margin: The percentage of revenue that turns into actual profit.

For example:
If a customer spends $100 per purchase, buys 5 times a year, stays with you for 3 years, and your profit margin is 20%, the CLV is:
CLV = 100 x 5 x 3 x 0.2 = $300

Pro Tip: Many businesses stop at the base calculation, but here's something that'll give you a competitive edge: factor in customer referrals. If a customer brings you 2 new clients over their lifetime, their CLV effectively doubles. To track this, add a simple “referral multiplier” to your formula:

CLV = (Average Purchase Value x Purchase Frequency x Customer Lifespan x Profit Margin) x (1 + Referral Rate)

By factoring in referrals, you get a far clearer picture of your top-tier customers who bring in exponential value.

How can Customer Lifetime Value improve my CRM strategy?

If you run with a CRM like Super Easy CRM, you can have CLV built into each one of your contacts and organizations. But, even if you're currently satisfied or contractually obligated to be with your current CRM, CLV can still be used to drive your sales strategies.

To create an effective strategy, each of your leads, contacts, or organizations will need to receive some sort of marker, which can be as simple as a status or as fancy as a special color denoting their value. Using these indicators, you can get specialized salespeople assigned, create custom workflows, or offer custom products.

With the right tools to help you filter through noise and avoid spending too much time in 'lead hell,' your profits can skyrocket.

More calculators and free tools for your business with Super Easy CRM

If you found this CLV calculator useful, please consider signing up for a free, no credit card required trial of the best productivity-focused CRM on the market, Super Easy CRM. And while you're here, head on over to the free Customer Journey Builder to create a mind map of all the steps your customers take when interacting with your business.

Matt Irving is the CEO of Super Easy Tech, LLC.

Matt is the CEO of Super Easy Tech and creator of Super Easy CRM. He is a passionate software engineer, tech blogger, and gamer. Feel free to connect on any of the platforms listed below.

Posted by: Matt Irving on 12/16/2024