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Here’s a worked example of the customer lifetime value calculation using the simple formula below: Customer revenue per year * Duration of the relationship in years – Total costs of acquiring and serving the customer = CLV. Here’s the example in practice: Customer A’s revenue per year = £500. Customer relationship duration = 10 years.
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The customer lifetime value formula is Customer Lifetime Value = Customer Value x Average Customer Lifespan. The CLV result is the revenue you expect an average customer to generate during their relationship with your business. Typically, lifetime value (LTV) calculates the overall value of all customers.
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