CLV or Customer Lifetime Value / PRR or Project Rate of Return

How much what you spend in marketing to attract a new customer? Here is an example: GoDaddy at the time I wrote this was offering an affiliate program to pay $120 to the advertiser for a customer who signed up for a year of hosting with them. The hosting plan this was for would be around the same amount, so why would GoDaddy pay out almost the same out it is bringing in off a sale? CLV or customer lifetime value, they know that they can spend a certain amount to obtain a customer because over that customers time with them they spend a lot more than $120.

CLV is more important to some businesses than others, if you know for a fact that a customer will only purchase form you once and that is it, then there is no need for you to know this KPI. However if you continue to sell to existing customers than you need to know your CLV.

Calculating your CLV first you need to know what your AOV is you can check the previous post for that, if you have not read it already. Below is the formula.

Scroll to Top