How to Determine Customer Lifetime Value | Ep. #382

Marketing School - Digital Marketing and Online Marketing Tips

Eric Siu and Neil Patel

Business, Marketing, Careers

4.6 • 1.4K Ratings

🗓️ 17 August 2017

⏱️ 5 minutes

🔗️ Recording | iTunes | RSS

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Summary

In Episode #382, Eric and Neil discuss how to determine customer lifetime value. Tune in to learn the simplest formula you can use to calculate your customer lifetime value. Eric and Neil also drop several online tools that simplify the process and will do the math for you. Time Stamped Show Notes: 00:27 – Today’s topic: How to Determine Customer Lifetime Value 00:38 – There are multiple ways to determine customer lifetime value 00:52 – Eric shares an example of a SaaS company’s customer lifetime value 00:55 – Neil’s Crazy Egg has a churn of 10%, which is the number of customers who stopped using the product 01:08 – Average price per user ID is $30, so you divide $30 by the churn to get the lifetime value 01:40 – Technically you take the average pay per month 02:00 – Mixpanel can calculate your customer lifetime value 02:10 – RJMetrics can do it for you, too 02:21 – There’s a formula on Kissmetrics that you can copy to calculate the customer lifetime value 02:31 – Eric has tried different formulas and the one on Shopify’s blog is one worth checking out 02:50 – You can do the formula yourself, but there will always be flaws 03:00 – Marketing School is giving away a free 1 year subscription of Crazy Egg which is a visual analytics tool 03:50 – Go to SingleGrain.com/giveaway for multiple entries 03:59 – That’s it for today’s episode! 3 Key Points: There are several ways to calculate customer lifetime value, just find the one that suits you and your needs best. Consider using a tool for a more accurate calculation of lifetime value. You can create and execute the formula yourself, but don’t expect it to be error-free. Leave some feedback: What should we talk about next? Please let us know in the comments below. Did you enjoy this episode? If so, please leave a short review. Connect with us: NeilPatel.com Quick Sprout Growth Everywhere Single Grain Twitter @neilpatel Twitter @ericosiu Learn more about your ad choices. Visit megaphone.fm/adchoices See omnystudio.com/listener for privacy information.

Transcript

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0:00.0	Get ready for your daily dose of marketing strategies and tactics from
0:06.8	entrepreneurs with the guile and experience to help you find success in any
0:11.4	marketing capacity. You're listening to marketing school with
0:14.9	your instructors Neil Patel and Eric Sue.
0:18.6	All right guys before we start we got a special message from our sponsor.
0:27.0	If you want to Rank hire on Google, you got to look at your paid speed time.
0:31.5	The faster your website loads, the better off you are. With
0:34.4	Google's core vital update, that makes it super, super important to optimize your
0:38.5	site for low time. And one easy way to do it is use the host that Eric and I use dream
0:44.5	host so just go to dream host or Google it find it check it out and it's a great way
0:49.7	to improve your low time.
0:55.0	Welcome to another episode of Marketing School. I'm Eric Sue.
0:56.0	I'm Neil Patel.
0:58.0	And today we're going to talk about how to actually determine customer lifetime value.
1:02.0	So there's a lot of ways to do this.
1:03.8	And I'm going to give you the simple way of doing it
1:06.7	through software as a service at least.
1:08.9	But bear in mind, this is not the end all be all way.
1:11.0	There's actually multiple ways of doing it. And way can be I mean there's when you look at multiple ways I mean you know there there can be flaws sometimes
1:19.3	so I'm not saying this is perfect but let's look at it this way right let's look at
1:22.9	Neil's tool crazy egg right so let's say crazy eggs turn monthly churn so this is you
1:28.8	know the number of users that he's losing a month is 10% which is actually really bad.
	...

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