How to Calculate Customer Lifetime Value

How to Calculate Customer Lifetime Value

Customer Lifetime Value (CLTV) is the total amount of money a pet owner is expected to spend within your clinic over the course of their relationship with you.

The following components are used when calculating a customer’s lifetime value:

Average Purchase Value: Average amount a customer spends in a single transaction

Purchase Frequency: Number of times a customer makes a purchase within a specified period

Customer Lifespan: Average duration a customer stays engaged with your business

Customer Churn Rate: Percentage of customers lost over a given period Understanding How to Calculate the Formula

In one of our recent webinars, we walked through the New Veterinary Business Model. In this session we discussed Customer Lifetime Value in depth. The following 2 minute snippet is a great, bite sized visual aid for better understanding the formula needed to calculate your own customer lifetime value.

So, let's say you start the year with 3000 active clients and end it with 2700 clients. You will have had a customer churn rate of 10% and your average lifetime will be around 10 years, with their average customer value calculated at £594 per year and a total lifetime value of £5940. This is the amount of money you can expect to make from a customer over the course of their relationship with you. It's a great way to measure the success of both your business and the relationships you’re building with your clients through the services you offer and the tools in which you use to engage with them. Broken down further this will equate to each of your customers making around 2.7 transactions per year, with an average transaction value of £220.

How to Increase Your Customer Lifetime Value

Clinics using PetsApp have seen significant increases in their CLTV because of the tools they are provided with to enhance their engagements and monitor their value metrics. Once these metrics are tracked they can use features like nudges and appointment booking, as well as digital payments and wellness plans to further increase their customer compliance, loyalty and lifetime value.

If this sounds like the sort of thing your clinic should be doing, book your free consultation with one of the pack today who can help you get started with activating our new veterinary business model, being used by successful veterinary clinics across the globe. We've an entire tool kit of patient advocacy tools for you to effortlessly put into practice.

Calculate Your Customer Lifetime Value

A customer lifetime value calculator is a tool used to estimate the total revenue you can expect from a customer throughout the duration of their relationship with your business. With the help of the pack I've created a free and easy to utilise, calculator. Great for calculating your own CLTV score, in order to help better inform the decisions you make on everything you do to enhance your business including marketing strategies, customer acquisition costs as well as overall business profitability.

Further Learning

Much of the learnings in this article have come from the New veterinary Business Model session, recently recorded by myself and Dr.Thom. To level up your learning make sure to watch the full session, which is available to watch on demand for a limited period of time, via our PetsApp Youtube channel, enjoy!