Customer lifetime value and retention calculator

What the customer lifetime value and retention calculator does

Growing a business means knowing what a customer is worth. Enter the average order, how often customers buy, your margin and how long they stay, and the calculator gives the value of a customer over their lifetime, the profit from them and the most you can spend to win one. A scenario table shows the effect of keeping customers longer.

Who it is for

Shops, subscription businesses and service providers that want to spend on marketing wisely.

How to use the workbook

1. Enter the average order value, how many times a year customers buy and your gross margin.
2. Enter how many years a customer stays on average and what it costs to win one.
3. Read the lifetime value and the profit per customer.
4. Use the table to see the effect of keeping customers longer.
5. Save a copy under a new name for each month or year, so earlier records stay as they were.

What is inside

• Lifetime value from your own numbers
• Profit per customer after acquisition cost
• Ratio of value to acquisition cost
• Table of value by years retained
• All inputs in labelled cells

The workbook has these sheets: Instructions, Value. The main table has the columns Years a customer stays; Lifetime profit per customer. Yellow cells are for you to fill in and grey cells calculate by themselves, so leave the grey cells alone. The example rows show how it works; type over them with your own entries.

Tips for getting it right

• Use real averages from your sales records.
• Include repeat purchases only from the same customers.
• A ratio above three is usually healthy.
• Retention is often cheaper than finding new customers.

Why keep this record

Running a business on memory works until it grows. Writing the numbers down turns opinions into facts you can compare month to month, and shows early which products, customers or costs deserve attention. Even a simple workbook, used every week, usually beats a sophisticated one that is opened once a year.

Questions people ask

Do I need to know Excel formulas? No. Type into the yellow cells and the rest is worked out for you. The formulas are visible if you want to see how a figure is reached.

Can I add rows or change the layout? You can add your own columns to the right and your own notes. If you insert rows inside a table, copy the grey formula cells down so the new rows calculate too.

Will it work on my phone or in Google Sheets? Yes for viewing and typing, but dropdown lists and the charts look best in desktop Excel or LibreOffice.

Keeping it safe and up to date

A plan is only as good as the numbers you put in. Start with honest estimates, update the workbook as real figures arrive, and compare the two so your next estimate is better. Save a dated copy each month so you can see how your thinking changed.

Read how to build a cash flow forecast for the wider picture. See more business templates or ask us for a custom one.

The workbook works in Microsoft Excel, LibreOffice and Google Sheets. It is a tool to help you work out and record figures, not tax, legal or accounting advice, and it is not affiliated with the Kenya Revenue Authority. If something does not work as described, contact us and we will put it right.

Related guides, calculators and templates

• Guide: How to build a 12-month cash flow forecast for a small business
• Guide: How to price your products and services: markup, margin and break-even
• Guide: Turnover tax for small businesses in Kenya: rate, limits and when to use it
• Another template: 12-month cash flow forecast
• Another template: Annual operating budget by department
• Another template: Break-even and pricing calculator

Need something different? Request a custom template, browse all guides or see every Excel template.