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29 December, 19:45

Which woman has the most valuable CLV?

Shirley: purchased $400 in December and spent nothing else the rest of the year for a total of $400.

Marcia: spent between $10 and $65 each month from December to November for a total of $355.

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Answers (2)
  1. 29 December, 19:51
    0
    Marcia should have the highest CLV

    Explanation:

    there are several formulas for calculating customer lifetime value (CLV) but since the amount of information is limited, then I'll use the easiest one (for me at least).

    CLV = T x AOV x AGM x ALT

    T = average transactions per month AOV = average order value AGM = average gross margin (we are not given enough information) ALT = average life span

    Marcia Shirley

    T 12 per year 1 per year

    AOV $355 / 12 = $29.58 $400

    AGM N/A N/A

    ALT since she is a regular client, 1

    at least 2 years (this one and next)

    Marcia's CLV = 12 x $29.58 x 2 = $709.92

    Shirley's CLV = 1 x $400 x 1 = $400

    Given the limited information, we can assume that Marcia is a much more valuable client than Shirley.
  2. 29 December, 21:50
    0
    Marcia

    Explanation:

    Marcia has the most valuable CLV (Customer life time value) as she continuously spents her money on the business.

    Using the formula

    CLV = Average value of customer purchase X Number of times the customer will buy each Year X Average length of the customer relationship (in years).

    Marcia's CLV = $10 X 1 X 1 = $10

    Shirley's CLV = $400 X 0 X 1=$1

    Remember, the Customer life time value is a measure of a customer's worth to a business in terms of how much money they will spend on products during their life time.
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