Customer Lifespan Formula (from Churn)
Lifespan is the reciprocal of churn — how many cycles, on average, before a customer leaves — scaled by the upgrade-cycle length. Once CL is established, it feeds the Customer Lifetime Value formula (customer-lifetime-value), which converts those years of retention into dollars of gross profit.
The formula
CL = (1 / Churn) × Cycle
Estimated customer lifespan as a function of churn rate and the upgrade cycle.
What goes into it
- Fraction of users quitting per upgrade cycle
- Upgrade cycle length (years)
Worked example
Chapter 21's worked example:
| Churn / cycle | 24% (76% loyalty) |
| Cycle length | 2.5 yr |
| Lifespan | ≈ 10.4 yr |
| Churn / cycle | 11% (89% loyalty) |
| Cycle length | 2.9 yr |
| Lifespan | ≈ 26.4 yr |
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