How can I determine customer lifetime value?

[calieigh]

I feel confused because I need to determine the lifetime value of our customers, but there are so many approaches. I know that the average order amount per customer is $75, number of purchases per year is 1 with the interval of three years. Approximate gross profit is 30%. How can I calculate the customer lifetime value?

Thank you very much.

 

[Randall]

Well depends on many points.

Like What is the average age of your customers Because there is an average age of all human beings.

Second is that what is the ratio of returning customers.

Thanks.

 

[alencooper]

Many businesses have a client when they first sale price to see the view. If the lawsuit worth $ 39 in revenue for many companies in the lawsuit as being worth $ 39 would see a product is purchased. So if, and only if, on trial later buys, say, you have another $ 39 worth of the product revenue of $ 78 will be seen as. Let's assume the value of the company s customer looks like this. Managers with other businesses, perhaps a little more experience, better than the S company to address the above model to follow. They know the true value of the lawsuit that all the purchase price of all purchases that (the future is likely to make discounted to present value plus has made) is. The life value (LTV) is called.

 

[alairellis23]

I understand what you've told me, your average order is $45, one per year, with customers retained for an average of 4years, and gross profit is 20%.
The lifetime customer value is 20% X $ 45 X 4 = $36.
You could spend up to this amount to acquire a customer and break even.