Once you get a customer, how much do they spend with your business? This will tell you how much you can afford to spend on customer acquisition costs. Companies with a higher CLV can generally afford to spend more on acquiring new customers. It also tells you how loyal your customers are and can point to opportunities to improve loyalty.
Measuring CLV is a little more complicated than tracking many other metrics. Here's how to calculate the metric.
Take your total revenue and divide it by your total number of orders. This tells you your average revenue per customer. You will then need to calculate how many orders you have received in a year and divide that cayman islands email list by how many customers have placed those orders. You will also need to know your average customer lifespan, or how long a customer has been buying from your company. You can then take your average customer value and multiply it by your total customer lifespan to get your customer lifetime value.
7. Customer Churn Rate
Customer churn is a normal occurrence and shouldn't worry you too much. But when your customer churn rate is too high, it may be trying to tell you something about the quality of your products and services or how well you support your customers.
It's important to know your church rate, but it's also helpful to know why your customers are leaving you. Completing customer surveys and focus groups can provide this information.
To calculate your churn rate, you take the total number of customers at the beginning of the period, then subtract the total number of customers at the end of the period. You can do this quarterly or annually to calculate your churn rate. For example, you may find that at the beginning of the year you have 1,000 unique customers. But by December 31 of that year, you only have 800, which is a 20 percent churn rate.
Defining Your Marketing Success
If setting up these metrics and defining success seems complicated, it may be time to bring in an expert. New Light Digital has extensive experience across multiple industries and all digital marketing tactics. We understand what success looks like and can help marketing teams adjust their strategy to ensure success. Schedule a free consultation today to learn more.