Marketing
Average customer lifetime
Churn and lifetime are reciprocals. At 4 per cent a month the average life is 25.0 months; at 2 per cent it is 50 months.
The Formula
Lifetime months = 1 / monthly churn
Churn and lifetime are reciprocals. At 4 per cent a month the average life is 25.0 months; at 2 per cent it is 50 months.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| Monthly churn | Probability a customer leaves in a given month | rate per month | Here 0.04. Written as a decimal, so 4 per cent becomes 0.04. |
| Lifetime months | Average number of months a customer stays | months | Here 1 / 0.04 = 25.0 months. |
What Each Symbol Means
Monthly churnrate per month
Probability a customer leaves in a given month
Here 0.04. Written as a decimal, so 4 per cent becomes 0.04.
Lifetime monthsmonths
Average number of months a customer stays
Here 1 / 0.04 = 25.0 months.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate customer lifetime value page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Customer Lifetime Value, filed under Business. Every number the guide produces comes from substituting into this one line.