Understanding Customer Lifetime Value

josephmckeown

Lots of important numbers and details can be found on the Customer Lifetime Value report. Among the data points that can be found, we can see both historic activity in your store, recent activity in your store, and how certain customers compare to that of average customers. Using calculations, we can also build comparisons to whether recent activity is consistent with historic activity, and whether it is increasing in volume or slowing down.

Here are some of the data points that can be surfaced, to build rich analyses about your customers' activity.

Historic Lifetime Value (Measure)

Summed Sale Line subtotals

Very simply, this is the complete subtotal of all the customer's identified purchased in your store.

Historic Lifetime Value (Filter)

Summed Sale Line subtotals

Similarly to the above Measure, the Historic Lifetime Value can also be applied on a report as a filter.

For example, if I wish to identify only customers that have spent more than $10,000 in my store, or, if I wish to identify only customers that have spent less than $1,000 in the store, this is how I can proceed.

Average Lifetime Value (Measure)

Average Lifetime Value among all customers

When applied to the individual customer, the Avg Lifetime Value is identical to the Historic Lifetime Value.

When applied to a grouping of customers, the Avg Lifetime Value is:

Sum of all customers' Historic Lifetime Value / Number of Customers

Sales Total

Total revenue of that grouping

When looking at the Historic Lifetime Value, we can also isolate Sales activity from a certain timeframe on the same report.

If we were to add the Sale Total next to the Historic Lifetime Value, we'd see that they are essentially the same:

(keen observers will notice that, yes, HLV is a rounded whole number, and that Sale Total is two decimals)

BUT, we also could filter this report to limit the date of Sales considered.

Let's see what happens when we apply a filter for the Sales Date

we'll see that two things have happened:

First: the Historic Lifetime Value has been kept, but the Sale Total now is only that which corresponds to the defined Sales Date range.

And Secondly, Customers with no Sales during this timeframe were not included on the report.

Sale Lines Total

Summed revenue of all lines on the sale with no tax

Similarly to above, the Sale Line Total, with no filters, will result in identical values as Historic Lifetime Value and Sale Total

We'll see that the Total and Sale-Line Total are equal to each other, but different from the Historic Lifetime Value.

BUT

We could also filter this report on the Item.

Let's say, that we are only interested in Sales that were for items in the "BIKES" Category

We'll see now that a few things have happened.

First, the Sales which did not include Bikes are not included. This removes some Sales and it removes some Customers

Secondly, we'll see variance between the three numbers now.

• The Historic Lifetime Value represents all Sales
• The Sale Total represents the total of Sales where "BIKES" were present
• The Sale Line Total represents the total of the "BIKES" items

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