Table 3From “Customer lifetime value is a forecast, not a fact”
Customer lifetime value formula and calculation: what must be declared?
Table 3Customer lifetime value formula and calculation: what must be declared?
| Field | Declare before calculation | Failure if omitted |
|---|---|---|
| Unit and cohort | Account, customer, contract, or cohort, plus the entry event | Averages mix different starting populations |
| Contribution | Revenue and the costs assigned to serving the unit | Revenue is mistaken for value |
| Survival and expansion | What counts as remaining, contracting, or expanding | The forecast silently changes its outcome |
| Horizon and discounting | Decision window, as-of date, and discount treatment | Precision is confused with validity |
| Outside costs | Acquisition, onboarding, service, or collection costs included separately | The same cost is counted twice or not at all |
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Growth that compounds
Customer lifetime value is a forecast, not a fact
Customer lifetime value is a discounted forecast of margin, survival and expansion. Make the assumptions visible before comparing customers or channels.
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