customer lifetime value, CLV, customer relationship management, analysis, services
- Preferred format: This teaching activity should be run in student pairs or small groups.
- Student audience: This discussion exercise is more suitable for advanced students studying services marketing or marketing metrics.
- Exercise time: This activity will probably run around 20-25 minutes.
Review the activity below or download the PDF student worksheet
- Student Worksheet: Customer Lifetime Value Calculation
- Instructor Solutions (Members Only): Customer Lifetime Value Calculation (a step-by-step guide) = Solutions
Student Discussion Task
For this exercise, you will work through a complete calculation of customer lifetime value, which is provided over a ten-year period with all information clearly provided.
Your task is to essentially explain the mechanics of the calculation.
The following diagram can be enlarged by clicking, and it provides a ten-year view of customer lifetime value, with the final key CLV number listed in the bottom in yellow.
Student Discussion Questions
- Work through each line of the calculation and take turns in your group to explain what is happening in each row.
- Once this is completed, work through the mechanics of the calculation and discuss why each row is necessary.
- What options with this particular situation have in order to improve final customer lifetime value (that is, what numbers could increase or decrease) to increase the final value?
- Interpreting Customer Lifetime Value
- Calculating Customer Lifetime Value (Basic Formula)
- Justifying Marketing with Customer Lifetime Value
- Working with Customer Lifetime Value
- What is Customer Lifetime Value? (Shopify’s view)