A Customer Lifetime Value Calculator can give digital publishers a clearer picture of how their readers contribute over time, helping you nurture lasting relationships and grow with your audience. Let’s explore some common questions:
What is Customer Lifetime Value (CLV)?
Customer lifetime value (abbreviated as CLV or LTV) represents the total dollar amount of donations or subscription revenue you can expect from your average supporter from their first to last purchase.
Instead of looking at the value of individual transactions, CLV takes into account all potential transactions to be made during a customer relationship timespan. This allows you to calculate the specific historic revenue from that customer and predict future revenue.
Why is CLV important for digital publishers and news publishers?
As this article from FT Strategies states, “By putting LTV at the forefront of your business, publishers are able to focus on long-term value rather than short-term metrics.” In other words, CLV is important for measuring the quality and loyalty of your readers — and ultimately, the financial sustainability of your publication.
For independent publishers and content creators, strategic pricing involves carefully balancing reader affordability with sustainable revenue generation. This may include implementing tiered pricing models, offering special promotions or adjusting prices based on audience feedback and market trends.
A Customer Lifetime Value Calculator (CLV) is a great tool to leverage for strategic pricing as you make decisions about increasing or decreasing your prices. Your CLV calculation provides a snapshot of a given point in time, helping you make data-driven choices.
Effective strategic pricing helps publishers maximize their revenue potential while maintaining reader loyalty and supporting their mission.
READ MORE: Follow these strategic pricing tips to find what makes sense for your readers and boosts your revenue.
Introducing Indiegraf’s Customer Lifetime Value Calculator
This Customer Lifetime Value Calculator by Indiegraf was put together for publishers who rely on reader revenue like donations, membership and subscriptions. This calculator can help you determine the CLV for:
- All customers (donors, subscribers, supporters and members)
- Customers with a recurring subscription (monthly or yearly)
- Customers who only make one-time contributions or payments
Benefits of using a Customer Lifetime Value Calculator
According to the Local News Initiative, the two main factors that determine the future value of reader relationships are the amount of profit received each month and the monthly retention rate.
Using a Customer Lifetime Value Calculator and running these numbers is crucial for understanding what drives retention, the causes of cancellation, and improving the engagement and subscriber experience, says Tom Collinger, Spiegel’s Executive Director.
Calculating this metric can help guide your business strategy in many areas, including acquisition, customer retention, customer support, and products and services. Shopify outlines what knowing the CLV can tell you about your business in this blog post, such as:
- The cost of acquiring a new customer
- Which products have the highest profitability
- Details about the customer journey and churn rates
How to calculate CLV for subscribers and donors
There are many ways to calculate CLV, but one of the simplest methods is to account only for revenue, not costs. Ultimately, it doesn’t matter which method you use, as long as you stick with it over time.
The best way to use CLV is to calculate it at a recurring frequency, such as every quarter, and benchmark it against yourself. It also helps to track this data over a long period, so you can track long-term financial sustainability.
You can also use it to measure the impact of changes — like increasing or decreasing your recommended donation amounts.
💡When you download Indiegraf’s Customer Lifetime Value Calculator, you get access to a step-by-step guide and an in-depth video tutorial walkthrough on how to use the tool.
Strategies for digital publishers to maximize CLV
Check out these other resources for understanding and using CLV, and strategies for increasing this metric:
📖Free vs. paid content: Exploring the subscription revenue model for news publishers (Indiegraf)
📖“Why I ask our publication’s supporters why they give” (Sam Hoisington for Indiegraf)
📖 Tips for developing rewards for news donors (Indiegraf)
📖 The path to sustainable revenue: why lifetime value is an important metric for a subscription business (FT Strategies)
📖News outlets should build customer lifetime value into subscription strategy, researchers say (Local News Initiative at Northwestern)
📖One subscriber or 48,000 pageviews: Why every journalist should know the “unit economics” of their content (Nieman Lab)📖5 strategies for increasing customer lifetime value in digital news media subscriptions (Acrotrend)
Not sure how to get started? Reach out to inquire about a coaching session with Indiegraf Experts! We can help calculate the CLV for your publication and implement strategies to grow your value.
