8 Steps to Using Customer Lifetime Value Effectively

Learn how to calculate customer lifetime value (CLV) from start to finish.

What is CLV?

Customer Lifetime Value (CLV) is the single most important metric for you to know because it demonstrates who your best customers are and what they have in common.

Why is CLV important?

CLV is a metric that estimates how much value (usually revenue or profit margin) any given customer will bring to your business over the course of the total time they interact with your brand—past, present, and future.

The First 3 Steps

Build Lookalike Audiences

1

Locate necessary data, including transaction history, customer demographics, profile data, marketing actions, and product, website, and app interactions.

High-Value Customer Behaviors

2

Forecast every existing customer’s behavior using that data. The goal is to predict the number of future transactions, predicted churn date and expected spend amount.

RFM Segmentation

3

Split the data into two sets for training and testing. The training data will form the basis of your model, and reserving test data allows you to benchmark how well the model performs.

8 Steps to Calculate Customer Lifetime Value

Download Retina’s whitepaper to learn:

  • How to accurately calculate customer lifetime value
  • What you need to compute CLV at the individual level
  • Why CLV is the single most important metric for your business
  • How Retina can help you connect the data to your strategies