Calculating the Lifetime Value

Blog by Moji Cinema

Calculating a Lifetime Value

  • Moji Cinema

Categories: Authenticity , Things to do in ABQ , Video Strategy

Calculating the lifetime value of a client gives you a framework for knowing how much you should be willing to spend to acquire one.  Here is an equation you can use. 

For Example if the average sale for a company was $100 and the average number of trans-actions that customer spent each year was 3 and that customer stayed with the company was 5 years, the LVT would be $100 x 3 x 5 = $1500. If the gross profit margin for that client was 50%, the Customer lifetime value would be $1,500 x 50% = $750.

Knowing that a client is worth $750 will give you an idea of how much you would be willing to spend to acquire that client.

Knowing these numbers will help you make better advertising decisions.

If you would like to book a call with me to brainstorm on some ideas to make your ad budget work for you. 

Book a free discussion call with Paul Jew.