What is Customer Lifetime Value (CLV), and how do you calculate it?
In short – The projected revenue a customer will generate during their relationship with the business.. A key marketplace metrics you should track.
Customer Lifetime Value (CLV) Formula
CLV = Average Purchase Value × Purchase Frequency × Customer Lifespan
Customer Lifetime Value (CLV) is a crucial metric that estimates the total revenue a business can expect from a single customer over the course of their relationship. A higher CLV indicates strong customer retention and effective monetization strategies. Businesses use CLV to guide marketing spend, customer engagement efforts, and long-term profitability strategies. This metric provides deep insights into business performance, helping to identify trends, optimize strategies, and improve overall marketplace efficiency.
How can you find your Customer Lifetime Value (CLV)?
You should generally be able to calculate your Customer Lifetime Value (CLV) with tools you already posess. If that's not the case, signing up for an analytics tool may make sense.
Among others, twosided is one of the tools you could consider. Out-of-the-box, you'll get over two dozens marketplace KPIs and detailed tracking for your supply, demand and other factors that determine marketplace health.
Explore other metrics
Net Promoter Score (NPS)
A measure of customer loyalty and satisfaction based on user feedback.
Average Order Value (AOV)
The average value of orders placed on the platform.
Supplier Lifetime Value (SLV)
The projected revenue generated by a supplier over their tenure on the platform.
Repeat Purchase Ratio
The proportion of customers who make repeat purchases over a given period.
Customer Lifetime Value (CLV)
The projected revenue a customer will generate during their relationship with the business.