Introduction to Average Customer Lifetime Value (ACLV)
Average Customer lifetime value (ACLV) measures how much, on average, each customer is worth to your store, now and in the future. It places a financial value on your customer relationships, i.e., the benefit of attracting a new customer and keeping them.
In this Article:
- Why ACLV is important
- How ACLV is calculated
- How Marsello helps improve ACLV
Why ACLV is important
For retailers, it's one of the most critical measures of success. It's a customer-centric measure that can help you make important business decisions, and create marketing strategies to keep valuable customers and increase revenue from less valuable customers.
How ACLV is calculated
Your ACLV is calculated using 4 important factors; average customer lifetime, average customer account age, average order value, and average order frequency.
The great news is Marsello calculates this for you. In your Marsello admin > Revenue & Customer Insights dashboard, you'll see your ACLV of your customer database.
- Average Customer Lifetime: The average amount of time that a customer spends in a relationship with your retail store.
This is modeled from the retail customer lifetime best practice average of 3 years.
- Average Customer Account Age: The average amount since your customer made their first order at your store.
Average customer account age = Total customer account age / Total customers.
- Average Order Value: The average amount of money that the customer spends each time that they make an order.
Average order value = Total sales ($) / Total order count.
- Average Order Frequency: The average number of repeat orders that a given customer makes.
Order Frequency = Repeat order count / Total order count .
How to improve CLV with Marsello
Here are a few ways in which Marsello's features can help improve your CLV:
Increase order value:
- Product Recommendation Block can be added to any of the email flow. This automatically pulls through products that your customers will most likely buy next.
- Best Customer Email Flow encourages your best customers to spend more by sending exclusive emails just for them.
Increase order frequency:
- Loyalty Program, encourage customers to keep shopping with you by automatically rewarding loyalty points for spend, product reviews, sharing on social media and more, that customers can use towards exclusive rewards.
- First-Time Customers Email Flow helps make a great first impression and bring first-time shoppers back a second time.
- Win-Back Email Flow will help bring your customers back who haven’t shopped in a while.
Increase customer account age:
- Feedback automatically asks customers to rate their experience to measure their satisfaction, helping improve your customers' experience so they keep shopping with you.