ASSUMPTIONS OF CUSTOMER LIFETIME VALUE CALCULATOR
- The average customer lifetime is 5 years. Some customers may purchase for a shorter period while others may purchase for a longer period. But on average they keep on returning for 5 years.
- The value of customers’ orders is normally calculated using the average ticket price (for a single person).
- Generally speaking, when an individual customer places an order for a group, the order is usually (on average) for three people.
- On average 25% of referrals (from existing customers) become regular customers. The remaining 75% tend to purchase only a few times.
- Over the course of 5 years, each regular customer will have (on average) referred 12 people to your business. This is a conservative average but highlights the importance (and impact) of lifetime customer value.