/uploads/galerie/000183/Sales - Customer Lifetime Value.png

 

Presentation

This dashboard page shows the Customer Lifetime Value (CLV or LTV)as well as the Customer Churn Rate. 

Definition of Churn Rate

The Churn Rate is the share of Customers who left from one year to another.

The Churn Rate for Year "N" is computed as follows:

([Customers with at least "N+1" years since first sales date, having generated revenues in Year "N"]

Minus

[Customers with at least "N+1" years since first sales date, having generated revenues in Year "N+1"])

Divided by

[Customers with at least "N+1" years since first sales date, having generated revenues in Year "N"]

More details on "Customer Churn Rate" here.

 

Definition of Customer Lifetime Value

The Customer Lifetime Value is a prediction of all the value (margin or revenues) you will derive from the entire relationship with a customer.

The Customer Lifetime Value for Year "N" is computed as follows:

[Customer Lifetime Value Year "N-1"]

Plus

([Revenues in Year "N" for Customers with at least "N" years since first sales date]

Divided by

[Customers with at least "N" years since first sales date])

More details on "Customer Lifetime Value" here.

 

Dashboard page

You can visualize the LTV at the end of first 5 years of customer lifetime, starting first sales date.

This page is composed of four sections:

  • Client Lifetime Value - LTV
  • Client Churn Rate Evolution
  • CLTV Evolution
  • CLTV by Cohort

 

Client Lifetime Value - LTV

This table shows one row per cohort, i.e. per year of first sale by customer.

Concretely, the line '2015' shows the Lifetime of all customers having bought something for the first time in 2015.

The second column, called 'Number of Customers' shows the total number of customers having done their first purchase in the related year (cohort).

Then for each of the first 5 years of customer lifetime, you can see two KPIs:

  • CLTV at 1 year:
    • Lifetime Value: Average Turnover per customer at the end of the first year of lifetime (= Turnover on first 12 months of lifetime, divided by the number of customers having at least 12 months of lifetime)
  • CLTV at 2 years:
    • Churn Rate: Share of lost customers from 1st year of lifetime
    • Lifetime Value: Average Turnover per customer at the end of the second year of lifetime (= Turnover on first 24 months of lifetime, divided by the number of customers having at least 24 months of lifetime)
  • CLTV at 3 years:
    • Churn Rate: Share of lost customers from 2nd year of lifetime
    • Lifetime Value: Average Turnover per customer at the end of the third year of lifetime (= Turnover on first 36 months of lifetime, divided by the number of customers having at least 36 months of lifetime)
  • CLTV at 4 years:
    • Churn Rate: Share of lost customers from 3rd year of lifetime
    • Lifetime Value: Average Turnover per customer at the end of the fourth year of lifetime (= Turnover on first 48 months of lifetime, divided by the number of customers having at least 48 months of lifetime)
  • CLTV at 5 years:
    • Churn Rate: Share of lost customers from 4th year of lifetime
    • Lifetime Value: Average Turnover per customer at the end of the fifth year of lifetime (= Turnover on first 60 months of lifetime, divided by the number of customers having at least 60 months of lifetime)

 

Client Churn Rate Evolution

This DataViz shows the evolution of Customer Churn Rate for first  five years of Customer Lifetime.

 

CLTV Evolution

This DataViz shows the evolution of Customer Lifetime Value for first  five years of Customer Lifetime.

 

CLTV by Cohort

This DataViz shows the Customer Lifetime Value by Cohort. 

There is one line for each first five years of Customer Lifetime.

An ascending line would show your ability to develop your Customer Lifetime Value across cohorts.

 

Filter your data

This data visualization comes with four top filters:

In your SAP SD dashboard, you will be able to filter on:

  • CustomerSold-to party [VBAK.KUNNR | VBRK.KUNNR]
  • CountryCountry [KNA1.LAND1 | TVBUR.ADRNR]
  • DivisionDivision [VBAP.SPART | VBRP.SPART]
  • Material GroupMaterial Group [VBAP.MATKL | VBRP.MATKL]

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