How To Calculate Lifetime Value in MultiView | Arithmix

Calculating lifetime value is an important aspect of any business strategy, as it helps you determine the long-term value of a customer. In this article, we will discuss what lifetime value is, why it is valuable to calculate it, and how to calculate it in MultiView.

What Is Lifetime Value?

Lifetime value is the total amount of money a customer is expected to spend on your products or services over the course of their lifetime. It takes into account the customer's purchase history, the frequency of their purchases, and the average amount they spend per purchase. By calculating lifetime value, you can determine the profitability of a customer and make informed decisions about how much to invest in acquiring and retaining them.

For example, if a customer spends $100 on your product every month and is expected to continue doing so for the next 5 years, their lifetime value would be $6,000 ($100 x 12 months x 5 years).

When Is It Valuable To Calculate Lifetime Value?

Calculating lifetime value is valuable for any business that wants to understand the long-term value of their customers. It is especially important for businesses that rely on repeat customers, such as subscription-based services or businesses with high customer retention rates.

By knowing the lifetime value of a customer, you can make informed decisions about how much to spend on marketing and advertising, how much to invest in customer service and support, and how much to invest in product development and innovation.

How to Calculate Lifetime Value in MultiView

Calculating lifetime value in MultiView is a straightforward process. First, you need to gather data on the customer's purchase history, including the frequency of their purchases and the average amount they spend per purchase.

Next, you need to calculate the customer's expected lifespan. This can be done by looking at the average lifespan of your customers or by making an educated guess based on the customer's age, demographics, and other factors.

Once you have this data, you can use the following formula to calculate the customer's lifetime value:

Lifetime Value = Average Purchase Value x Number of Purchases per Year x Expected Lifespan

For example, if a customer spends an average of $50 per purchase and makes 4 purchases per year, and their expected lifespan is 5 years, their lifetime value would be $1,000 ($50 x 4 x 5).

By calculating lifetime value in MultiView, you can gain valuable insights into the long-term value of your customers and make informed decisions about how to invest in acquiring and retaining them.

How Do You Calculate Lifetime Value in MultiView

MultiView itself isn’t naturally geared towards letting you calculate complex metrics like Lifetime Value. As an alternative, teams typically use products like Arithmix to import data from MultiView and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like MultiView, combine it with data from other systems, and create calculations like Lifetime Value.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Lifetime Value in Arithmix

Calculating metrics like Lifetime Value is simple in Arithmix. Once you've created your free account, you’ll be able to import your MultiView data, and use it to create natural language formulas for metrics like Lifetime Value.

Arithmix is designed to give you the power to build any calculations you want on top of your MultiView data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.