Customer lifetime value and subscriptions
What customer lifetime value (CLV) is and how subscription design affects it.
Customer lifetime value (CLV) estimates the total revenue a customer brings in over their whole relationship with a retailer. A simple version is average order value × purchase frequency × customer lifespan.
How subscriptions affect CLV
- Lifespan: lower churn means customers stay longer.
- Frequency: repeat orders happen automatically.
- Order value: customers who can easily add products may spend more per order.
The original Subundl site linked these together: "Making happy, loyal customers increases average order value, maximises customer lifetime value & accelerates growth."
Measuring it
Track CLV by group of customers who started in the same period, not just as one overall average, and compare subscribers with one-off buyers. Make sure each group has been around long enough before drawing conclusions.