Ever wonder how much to spend on an ad campaign, or another customer acquisition or customer retention program? Brad Sugars provides a calculation to consider:

Lifetime Customer Value = (Average Value of a Sale) X (Number of Repeat Transactions) X (Average Retention Time in Months or Years for a Typical Customer)

Knowing your numbers will help you to make more informed decisions. The lifetime value number is important, but make sure to use it in conjunction with conversion numbers. In his example, he uses free gym memberships to drive traffic. If you had 50 people take the free offer, but only 1 signed up as a member then your acquisition cost per that 1 member is really much higher than first glance.