Influx Metrics: Customer Lifetime

The fight is won or lost far away from witness – behind the lines, in the gym, and out there on the road, long before I dance under those lights – Muhammad Ali

Here is the next article in our series of ‘Influx Metrics’. The series covers the metrics that are important to understand if you are interested in improving your gym. This article covers the Customer Lifetime (CL), and builds on metrics covered in previous articles, which you can find here:

  1. Influx Metrics: Retention
  2. Influx Metrics: Average Revenue per Member (ARPM)

 

Influx Metric #3: Customer Lifetime

What is the Customer Lifetime (CL)?

Customer lifetime is the average length a member will stay at your gym (based on historical data). For example, on average a member may stay for 12 or 28 months.

Why is CL important?

CL helps you better understand the total revenue that comes from members. It is also required for completing other Influx Metrics we’ll be calculating in the future.

How do you calculate CL?

To calculate CL, we first need to know your retention. If you have not yet calculated your retention, then see this link: Influx Metrics: Retention.

Customer Lifetime = 1 / (1.00 – Retention)

 

Retention must first be converted to a decimal. For example 95% becomes 0.95

Example: If your monthly retention rate is 95%, then the CL is:
= 1 / (1.00 – 0.95)
= 1/ 0.05
= 20 months

In this example, the CL means that, on average, each member stays for 20 months.

Note: the time period matches the retention time period. If your retention rate was based over a year, then the CL result is also in years.

In our next Influx Metrics article we will describe how to use the CL to calculate how much you could be spending on attracting new members.