How To Calculate Lifetime Value in Odoo | Arithmix

Calculating lifetime value is an essential aspect of any business. It helps you understand the value of a customer over their entire relationship with your company. In this article, we will discuss what lifetime value is, when it is valuable to calculate it, and how to calculate it in Odoo.

What Is Lifetime Value?

Lifetime value is the total value a customer brings to your business over the course of their relationship with you. It takes into account all the purchases a customer makes, the frequency of their purchases, and the length of time they remain a customer. By calculating lifetime value, you can determine the profitability of your customer base and identify opportunities for growth.

For example, if a customer spends $100 on their first purchase and continues to make purchases every month for a year, their lifetime value would be $1,200. This is valuable information for businesses because it allows them to identify their most profitable customers and tailor their marketing and sales strategies accordingly.

When Is It Valuable To Calculate Lifetime Value?

Calculating lifetime value is valuable for businesses of all sizes and industries. It is particularly useful for businesses with a subscription-based model or those that rely heavily on repeat customers. By understanding the lifetime value of your customers, you can make informed decisions about how much to spend on customer acquisition and retention.

Additionally, calculating lifetime value can help you identify areas where you can improve customer satisfaction and loyalty. For example, if you notice that your lifetime value is low, it may be an indication that your customer service needs improvement or that your products or services are not meeting customer needs.

How to Calculate Lifetime Value in Odoo

Calculating lifetime value in Odoo is a straightforward process. First, you need to gather data on your customers' purchases, including the amount spent, the frequency of purchases, and the length of time they have been a customer. You can do this by exporting your sales data from Odoo and analyzing it in a spreadsheet program like Excel.

Once you have this data, you can calculate lifetime value using the following formula:

Lifetime Value = Average Purchase Value x Number of Purchases x Average Customer Lifespan

For example, if your average purchase value is $50, your customers make an average of 10 purchases, and the average customer lifespan is 2 years, your lifetime value would be $1,000.

By calculating lifetime value in Odoo, you can gain valuable insights into your customer base and make informed decisions about how to grow your business. Whether you are a small startup or a large enterprise, understanding the lifetime value of your customers is essential for long-term success.

How Do You Calculate Lifetime Value in Odoo

Odoo 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 Odoo 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 Odoo, 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 Odoo 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 Odoo 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.