(Customer Lifetime Value)?
Now that you've seen the potential uses of Customer Lifetime Value, let's look at how to calculate it in depth, taking into account your company's situation.
Let us remember that the CLTV formula is as follows:
Annual Income x Years of Life - Acquisition Cost
Now let's look at the workshop for each of the elements that make up the formula:
Annual revenue: This is the profit you generate from the saudi arabia mobile number owner details customer. In addition to turnover, you must take into account the operating costs of offering your product. This includes materials, time invested, and more. To do this, you should be clear about your break-even point and have a cost structure already calculated.
Lifetime Years: This is the number of years the customer will stay with you. You can usually calculate this by averaging all of your customers, taking a sample of previous years.
Cost of acquisition : This is the amount of money it cost you to acquire a customer from your marketing efforts. Each campaign you run will have a different cost and return, so it's important to track each one.
Let's look at each of these aspects in detail.
Calculate a client's revenue
Calculating revenue for each customer is relatively simple. You just have to add up all the billing generated during the customer's lifetime.
The problem comes when you have to subtract operating expenses. As we have already seen, this includes the variable costs that you need to pay in order to serve the customer. In the case of a coffee shop, this includes materials and working hours. In the case of an agency, this includes licenses and salaries.
To do this, it is advisable to keep track of your expenses and the profitability of each product or service you offer. This way, you will be able to know how much profit you are generating from a specific transaction.
