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  • CLV - Calculation

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    Utkarsh Pandey
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    This document shows the calculation of customer lifetime value (LTV) over 5 years under different discount rates and retention rates. LTV is calculated as the total discounted profits from a customer over their lifetime. The normal LTV assuming 100% retention each year is $500. LTV is lower when applying a 10% discount rate to account for the time value of money, and is lowest when using lower retention rates that assume more customer churn each year.

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    This document shows the calculation of customer lifetime value (LTV) over 5 years under different discount rates and retention rates. LTV is calculated as the total discounted profits from a customer over their lifetime. The normal LTV assuming 100% retention each year is $500. LTV is lower when applying a 10% discount rate to account for the time value of money, and is lowest when using lower retention rates that assume more customer churn each year.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    Download as xlsx, pdf, or txt
    49 views10 pages

    CLV - Calculation

    Uploaded by

    Utkarsh Pandey
    This document shows the calculation of customer lifetime value (LTV) over 5 years under different discount rates and retention rates. LTV is calculated as the total discounted profits from a customer over their lifetime. The normal LTV assuming 100% retention each year is $500. LTV is lower when applying a 10% discount rate to account for the time value of money, and is lowest when using lower retention rates that assume more customer churn each year.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 10

    Customer Lifetime Value

    Year 0 1 2 3 4 LTV
    LTV Normal Profits 100 100 100 100 100 500
    LTV @10% Discount Rate 100 90.91 82.64 75.13 68.30 417.0
    Discount Rate 10%
    Customer Lifetime Value

    Year 0 1 2 3 4 LTV
    LTV Normal Profits 100 100 100 100 100 500
    LTV @10% Discount Rate 100 90.91 82.64 75.13 68.30 417.0
    LTV @RR 20% 100 18.18 3.31 0.60 0.11 122.2
    Discount Rate 10%
    Retention Rate 20%
    Customer Lifetime Value

    Year 0 1 2 3 4 LTV
    LTV Normal Profits 100 100 100 100 100 500
    LTV @10% Discount Rate 100 90.91 82.64 75.13 68.30 417.0
    LTV @RR 20% 100 18.18 3.31 0.60 0.11 122.2
    LTV @RR 80% 100 72.73 52.89 38.47 27.98 292.1
    Discount Rate 10%
    Retention Rate 20%
    Retention Rate 80%
    Customer Lifetime Value

    Year 0 1 2 3 4 LTV
    LTV Normal Profits 100 100 100 100 100 500
    LTV @10% Discount Rate 100 90.91 82.64 75.13 68.30 417.0
    LTV @RR 20% 100 18.18 3.31 0.60 0.11 122.2
    LTV @RR 80% 100 72.73 52.89 38.47 27.98 292.1
    LTV @RR 50% 100 45.45 20.66 9.39 4.27 179.8
    Discount Rate 10%
    Retention Rate 20%
    Retention Rate 80%
    Retention Rate 50%
    Customer Lifetime Value

    Year 0 1 2 3 4 LTV
    LTV Normal Profits 100 100 100 100 100 500
    LTV @10% Discount Rate 100 90.91 82.64 75.13 68.30 417.0
    LTV @RR 20% 100 18.18 3.31 0.60 0.11 122.2
    LTV @RR 80% 100 72.73 52.89 38.47 27.98 292.1
    LTV @RR 50% 100 45.45 20.66 9.39 4.27 179.8

    Year 0 1 2 3 4 LTV
    LTV Normal Profits 100 100 100 100 100 500
    LTV @10% Discount Rate 100 90.91 82.64 75.13 68.30 417.0
    LTV @RR 20% 100 18.18 3.31 0.60 0.11 122.2
    LTV @RR 80% 100 72.73 52.89 38.47 27.98 292.1
    LTV @RR 50% 100 45.45 20.66 9.39 4.27 179.8
    Discount Rate 10%
    Retention Rate 20%
    Retention Rate 80%
    Retention Rate 50%

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