Customer Retention Graphs
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Customer Lifetime Value Percentage by Retention Rate Percentage
This graph shows a different way of looking at the effect of customer retention on Customer Lifetime Value by illustrating the corresponding increase in CLV with each percentage increase in customer retention.
Assumptions: The graph assumes the following formula to figure customer lifetime value; CLV = m(r/1 + i - r), Where m = margin or profit from a customer per period (e.g. per year), r = retention rate, i = discount rate. A margin of $100 is used with a discount rate of 12%. We also assume profit margins remain constant over the life of a customer, the retention rate for customers remains constant over time, and customer lifetime value is estimated over an infinite horizon.
Source: "Managing Customers as Investments"
Source: "Managing Customers as Investments"
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