What is Average Customer Lifespan (ACL)?
The average customer lifespan (ACL) is the average number of days between the first order date and the last order date of all of your customers. Convert the average number of days into years by dividing your number by 365. For example, if you determine that the ACL is 1,277.5 days, this would equate to an ACL of 3.5 years.
When do we use ACL?
Average Customer Lifespan is helpful in determining Customer Lifetime Value (CLTV):
Step1: Calculate Average Order Size(AOS)
AOS = Total Revenue / Total # of orders
Step2: Calculate Average Order Frequency(AOF)
AOF = Total # of orders / Total # of Customers
Step3: Calculate Average Customer Value(ACV).
ACV = AOS / AOF
Step5: Calculate Average Customer Lifespan(ACL).
ACL = 1st Order Date - Last Order Date
Finally Customer Lifetime Value (CLV) = ACL / ACV.