How is Customer Lifetime Value (CLV) calculated at the individual customer level according to the chapter?

Customer Lifetime Value (CLV) at the individual customer level is calculated using the formula: CLV = Customer value * Average customer lifespan. Customer value is determined by multiplying the average purchase value by the average purchase frequency, while average customer lifespan is the average duration a customer continues buying before churning.

To calculate CLV at the individual level, first determine the customer value, which involves calculating the average purchase value (total revenue over a period divided by the number of purchases) and the average purchase frequency (number of purchases divided by unique customers). Then, multiply this customer value by the average customer lifespan, which is computed by summing the lifespans of all customers and dividing by the number of customers. This provides a revenue-based CLV, and if profit-based CLV is desired, the result should be multiplied by the gross margin percentage.