Customer Lifetime Value - Plus

Customer lifetime value is an interesting exercise based on a lot of math. Customer lifetime value is defined as the present value of all current and future profits generated from a customer. And here's the formula

CLV = M x
R 1 + I – R

M = margin or profit from a customer in a certain period
R = your retention rate (most companies are between 60-90%)
I = discount rate (your company’s cost of capital, usually a rate of 8-16%)

If you go to the first link I have listed below, there is a handy dandy calculator to help you calculate this CLV for your company. BUT you have to know the following:
- Current customer base
- Total revenue for 1 year
- Average profit margin
- Current retention rate
- Percent increase in customer retention rate:


Customer Lifetime Value (CLV) Calculator
How to Compute Your Customer Lifetime Value
How to Calculate Lifetime Customer Value
Calculating LifeTime Value (LTV) or Lifetime Customer Value (LCV)

What I would like to propose is that it's really hard to measure what a customer's 'true' real lifetime value is to the success of your company. For example, you can do all the formulas above, and good luck because it is really hard sometimes to get all that financial information together, but does it show how 'valuable' the customer is to your company's success? I say no. Here are some areas that customers help you to be more successful and while there is probably some way to measure this, I don't have one today. The CLV plus areas I am talking about include:
- Customers who participate in press releases or news articles
- Customers who complete your customer surveys and give great feedback
- Customers who do sales references for your company and even site visits
- Customers who speak for you at events or conferences
- Customers who through Word of Mouth talk positively about you to their circle of influence
- Customers who assist other customers with online communities or other sites

Do you know who your most valuable customers are? And are you leveraging these customers enough? Customers are your most valuable assets! Get to know them and together you can help your company be even more successful!