Customer Lifetime Value

NOTE: This tool has been removed from my blog and made exclusively for users on my freelancing community membership site http://www.webinsiders.com

 

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  1. Ricardo says:

    Very useful tool, I’ll be sure to use this with my clients. It will make it much easier to sell services to them showing the increases we can make. Thank you.

  2. Mike Kawula says:

    Chad I love this simple tool. Think I’ll share it this week with my customer service team in my other business. Think its so important to show my team the lifetime value of our customers and why they all need to be providing 200% all the time as if I show them what happens if each just upsets 1-2 customers a day the impact on our business. Love this, thanks!

  3. Rene says:

    Wonderful video & tool here. Thank you so much!

  4. CT says:

    Chad great tool. I have a question; if it is a subscription business how I can use your tool?
    monthly subscription 7.99 like netflix.
    thanks
    CT

    • Chad says:

      Thanks for the comment CT. For a subscription service you would calculate how many months on average a customer stays paying the monthly membership. Do most customers stick around for just 1 month? 3 months? 3 years?

      Basically find out from your client or your research the average time before a customer cancels their subscription, and just factor that in.

      So if they pay $20/month and last about 6 months. That’s $120 per year for 1 year as a customer.

      If they stick around for 3 years, at $20/month that would be $240 per year, and you set the ‘Number of years a customer’ to 3.

      For the increase percentage part, say that they last 6 months on average. If you say you would increase the yearly revenue by 50%, then you’re basically saying you would make the customer last twice as long through out the year.. so they would stay on 12 months instead of 6 for the year.

  5. CT says:

    Sorry, I did not get this;
    “If they stick around for 3 years, at $20/month that would be $240 per year, and you set the ‘Number of years a customer’ to 3.”

  6. Chad says:

    Hi CT

    You were asking about monthly membership scenario. So if the average customer stays a paying monthly customer for 3 years at $20/mo for example, you would input that as:

    Dollar Amount of Average Sale: $20.00
    No. of Sales per Year: 12 (12 months in a year)
    No. of Years a Customer: 3

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