Customer Lifetime Value Calculator (CLTV)

How to Use the Calculator – Step-by-Step

1. Enter Annual Revenue per Customer (Yearly)
   Input the revenue generated annually from an average customer.

2. Enter Customer Relationship in Years (Yearly)
   Add the average duration of customer engagement with your business.

3. Enter Customer Acquisition Cost (Yearly)
   Input your customer acquisition cost (CAC), reflecting what it costs to bring in one customer.

4. Click ‘Calculate’
   View your CLTV result, which provides valuable insights into customer value and profitability.

Tip: Regularly update this calculation to adjust for changes in customer behaviour and acquisition costs.

Understanding Customer Lifetime Value (CLTV)

CLTV helps you understand how much a customer is likely to contribute to their relationship with your business. A high CLTV indicates that acquiring customers is profitable and suggests that investments in retention will yield high returns.

Note: For a more detailed analysis, consider using our Customer Acquisition Cost (CAC) Calculator.

Industry Benchmarks for CLTV

Practical Example

Scenario:

• Annual Revenue per Customer: ₹10,000

• Customer Relationship in Years: 5

• Customer Acquisition Cost: ₹2,000

Calculation:

• CLTV = (₹10,000 × 5) – ₹2,000 = ₹48,000

Interpretation:

The customer is expected to generate ₹48,000 in revenue over their lifetime, after accounting for acquisition costs. This helps assess whether your current Customer Acquisition Cost (CAC) is sustainable in the long run.

Tips to Increase CLTV

• Enhance Customer Support:
  Deliver exceptional customer service to enhance satisfaction and retention.

• Upsell and Cross-sell:
  Encourage customers to purchase more over their lifetime by offering relevant additional products or services.

• Personalise Engagement:
  Use data to personalise interactions and provide value that resonates with each customer.

• Loyalty Programs:
  Reward loyal customers with perks, discounts, or exclusive offers to boost retention.

• Regular Feedback and Surveys:
  Understand customer needs and expectations through regular feedback and implement improvements based on that information.