How To Calculate Customer Lifetime Value On Amazon

Amazon Customer Lifetime Value (CLV) Process

Note: The following process is applicable only for brands on Seller Central – this data is not available for brands on Vendor Central. 

1. Determine the time period that you’re evaluating (month, quarter, year). 
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2. Get your Amazon fulfilled shipments report: SC>Reports>Fulfillment>Sales>Amazon Fulfilled Shipments>Select Dates {exact dates} . Limitation: You can only get a 30 day report at a time. Repeat this step as many times as needed.
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3. Export the data to a spreadsheet. Each sheet should be for a single period (e.g. “February 2020”) and other sheets should be for comparison periods (e.g. “January 2020”). 
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4. Analyze frequency of purchases and the number of new customers versus repeat customers using excel formulas and pivot tables. Create a Chart to get a visual representation of New/Repeat Orders.
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   Pro Tip: Sometimes customers only upload a first name to their Amazon account – this can result in inaccurate data (customer may appear as ‘Repeated’ because the name appears more than once). Before doing a Pivot of the ‘Buyer Name’ column, scroll down to check if there are customers with first names only. If there are, filter the ‘Buyer Email’ or ‘Buyer Shipping Address’  and the ‘Buyer Name’ to check if the buyer really purchased twice. If there are different Buyer Email or Shipping Address values, then it’s a different customer.
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5. Do a CLV calculation based on the model below: 

1. 1. Average purchase value: Total Revenue divided by ‘Number of Orders’ over the same period of time (month, quarter, year etc)
   2. Average purchase frequency rate: ‘Number of Unique Orders’ divided by ‘Number of Customers’ (during the time period selected)
   3. Average Customer value: Multiply the ‘Average Purchase Value’ by the ‘Average Purchase Frequency Rate’
   4. Average Customer Lifespan: The typical formula would be the ‘Sum of Customer Lifespans’ divided by the ‘Number of Customers’. However, on Amazon, getting this data is impossible unless you have kept a record of every single purchase throughout the entire duration of your Amazon selling history. A typical lifespan for an Amazon Seller is 1-3 years. Customer Lifetime Value: Multiply Average Customer Value by the Average Customer Lifespan.