![]() ![]() harder to get at, like money in your 401(k)). In addition to computing your net worth, this tab also shows how much of your money is liquid (i.e. Note: You should only update the cells that have a light green background because all other fields have formulas and will update automatically. To fill out this page of the spreadsheet, copy the previous month’s column, change the column header to the current month, and then populate the fields that have a green background with the latest data from Personal Capital. It’s the best tool I’ve found for managing my portfolio so I definitely recommend it. If you don’t have a Personal Capital account, you can sign up for free here. Luckily, this step is easy because Personal Capital* aggregates all of your accounts for you. The first tab in the spreadsheet is where you record your monthly account balances and calculate your net worth. If you haven’t already downloaded the spreadsheet, click here to download now! Net Worth Tab In the spreadsheet calculation, customer retention rate is used as an estimate of probability of receiving the future customer cash flows (that is, revenues and costs).This page explains how to use my personal financial independence spreadsheet. For example, if the retention rate was 80%, then the formula would be 1/(1-0.8) = 1/0.2 = 5 years. It is more likely that a firm would know its retention or loyalty rate, rather than its lifetime period (in years) for customers.Ī formula can generally be used to calculate the second number. The customer lifetime in years is then automatically calculated for you. Step Four: Enter customer retention rate each yearįor the fourth step in using the free CLV template, you only need to enter the annual customer retention (or loyalty) rate. Please refer to the article on word-of-mouth cost savings. The final row is actually a cost saving – which is appropriate to use when the brand has supporting customers that refer new business (non-customers) – so word-of-mouth (WOM) actually saves the firm money by reducing acquisition costs. Basically, these are the costs of marketing investments aimed at existing customers in order to grow and hold the business.Please refer to the article on retention goals. The first is for any loyalty/retention costs and any up selling costs. Underneath the gross profit contribution there are two more rows of costs. The average customer product cost (underneath) is the variable cost required to provide those products and services to the average customer.Ĭustomer revenue less the average customer product costs automatically calculates the gross profit contribution per customer each year (in the first blue row). Step Three: Enter customer revenues and costsĪs you can see from the above diagram, there are four rows to complete – the first is customer revenues, which is the total income received from the average customer across all products and services. Please review articles on discount rates. If this is not available, usually as a rate of 10 to 20% is appropriate depending upon the investment return required. Most firms will have an average return on their investments, or possibly use a hurdle rate to evaluate new investment opportunities – this rate should be used. Step two is an optional, but recommended, step in the calculation of customer lifetime value. Step Two: Select and Enter the Discount Rate The new customer acquisition cost is then automatically calculated.Īs it says in the note on the side, if you already know the average acquisition cost, then simply enter it as the total promotional spend and then set the number of new customers to 1. The first number needed is the total spend on new customer acquisition.ĭirectly under that number, you need to input the number of new customers acquired. In this step, you need to enter two numbers in the gold cells. Step One: Enter Acquisition Costs PER New Customer ![]()
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