Customer Lifetime Value (CLV)
SaaS
Customer
What is Customer Lifetime Value?
The Customer Lifetime Value (CLV) metric indicates the total revenue a business can reasonably expect from a single customer account. It considers a customer’s revenue value and compares that number to the company’s predicted customer lifespan. Businesses use this metric to identify their most valuable customer segments. To adjust for fluctuations, it makes sense to consider a 12-month rolling average for both the average revenue per customer, and the monthly churn.
Customer Lifetime Value Formula
Customer Lifetime Value = (12-month rolling average monthly revenue per customer / 12-month rolling average monthly churn)
Customer Lifetime Value Unit
Customer Lifetime Value is stated in the unit EUR (€).
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More about Customer Lifetime Value
Customer Lifetime Value (CLV) is a key metric that helps businesses understand the total worth of a customer over the entire duration of their relationship. By calculating CLV, companies can make informed decisions about marketing strategies, customer retention efforts, and resource allocation.
How to visualize Customer Lifetime Value?
The KPI Customer Lifetime Value (CLV) can be visualized as a data card, showing the current value. Or you can use bar charts to see trends and to compare your current value with previous time periods.
Customer Lifetime Value visualization examples
Customer Lifetime Value
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Recommendations to improve Customer Lifetime Value
- Enhance Onboarding Experience: Focus on providing a seamless and personalized onboarding experience for new customers. Offer comprehensive training, tutorials, and documentation to help them quickly understand and use your software effectively.
- Proactive Customer Success Management: Implement a customer success management program to proactively engage with customers throughout their lifecycle. Assign dedicated customer success managers to monitor their progress, provide ongoing support, and identify opportunities for value realization and upselling.
- Offer Additional Value-added Services:Identify additional value-added services or features that align with your customers' needs and offer them as optional upgrades. This can include advanced training, premium support, customizations, or specialized consulting services.
- Personalize Communication and Offers: Segment your customer base and personalize your communication and offers based on their specific needs, preferences, and usage patterns. Use marketing automation tools to deliver targeted messages, product recommendations, and exclusive promotions that resonate with each customer segment.
- Implement Loyalty Programs: Develop loyalty programs that reward long-term customer engagement and encourage repeat purchases. Offer exclusive benefits, discounts, early access to new features, or VIP support to incentivize customers to stay with your company and increase their lifetime value.
