Customer Retention Graphs
| ‹ ‹ Previous Graph | Next Graph › › |
Customer Lifetime Value by Retention Rate
Customer Lifetime Value, referred in this graph, is defined as the present value of all current and future profits generated from a customer over the life of his or her relationship with a business. The result: a steady increase in customer lifetime value as customer retention increases.
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"
Contact Vox to discuss how we can help you improve customer retention rates and increase customer lifetime value.
