Customer Lifetime Value (CLV)

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Customer lifetime value (CLV) is the total revenue you can expect from a customer over the course of their relationship with your company. It helps you understand the long-term value each customer brings and guides you in deciding how much to invest in acquiring and retaining customers.

Longer customer lifetime means your customers are not only staying, but spending more over time, which increases profitability.

CLV = Average Purchase Value (APV) x Average Purchase Frequency (APF) x Average Customer Lifetime (ACL)

Example: If a customer typically spends $50 per purchase, buys four times a year, and stays with you for five years, your CLV would be $50 x 4 x 5 = $1,000.

Repeat purchase rate
The repeat purchase rate measures how often existing customers return to make a new purchase . A high repeat purchase rate is a good indicator of customer loyalty and satisfaction.

It shows that customers find value in your offerings and decide to buy from you again instead of board members email list going to the competition.

Repeat Purchase Rate = (Repeating Customers / Total Number of Customers) x 100

Example: If 200 out of 1,000 customers make repeat purchases, your repeat purchase rate would be (200/1,000) x 100 = 20%.

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Net Promoter Score (NPS)
The Net Promoter Score (NPS) measures customer loyalty based on their willingness to recommend your company to others . It is an important indicator of customer satisfaction and support.

A high NPS means that more customers are likely to promote your brand, which can lead to organic growth through word of mouth. To calculate NPS, ask customers, “How likely are you to recommend our company to a friend or colleague?” on a scale of 0 to 10.

Respondents are grouped into promoters or loyal customers (9-10), passives (7-8) and detractors (0-6).

NPS = % Promoters - % Detractors

Example: If 70% of your customers are promoters and 10% are detractors, your NPS is 70 - 10 = 60.