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I've always struggled with CLV calculations–both figuring it out and deciding if it's even valuable to know. We have customers in the thousands and, while a ha

I've always struggled with CLV calculations–both figuring it out and deciding if it's even valuable to know. We have customers in the thousands and, while a handful leave every month, many have been paying monthly for 2, 3 or more years. So, doesn't the CLV for a business that has been around for 5+ years change constantly? What good is that? Also, we have a setup fee for some products. So, once we keep a customer for 30 days (i.e. they're no longer eligible for a refund), they are worth at least the amount of the setup fee, right? BUT, if my CLV is $1,500 for a product with a setup fee, does that mean it's okay for me to spend $1,200 to acquire 1 new customer? I have a hard time believing that ...

pospischil 15y ago
Sounds like you have some fantastic customers/a great product! It's possible (and likely) that your CLV is changing over time as the mix of customers you are getting is changing - the key is to be able to calculate CLV as early as possible while still getting an accurate number. If you are going to earn $1500 in profit from a customer, why wouldn't you be willing to spend $1200 to acquire more? The issue you may run into is that, if your $1500 customers found you organically, you can't necessarily expect customers you acquire via different means to be worth the same. There are some other variables at play as well: are you cash constrained? How soon do you need your acquisition expense to be paid back?