Determine average purchase value
Determine average purchase frequency
Calculate customer value by multiplying average purchase value by average purchase frequency
Determine average customer lifespan
Calculate customer lifetime value by multiplying customer value by average customer lifespan
Alternatively, calculate CLV as average revenue per customer multiplied by gross margin and customer lifespan
Subtract customer acquisition cost if you want net customer lifetime value
Use historical customer data to refine the calculation
Segment customers for more accurate lifetime value estimates