Customer lifetime value by acquisition channel, first year
The short answer
Customer lifetime value by acquisition channel, measured over the first 12 months, is total spend from each channel's new customers divided by how many that channel brought in. Use cohorts with a full year of history, tag each customer by the channel of their first purchase, and convert spend to gross margin so channels with heavy discounting are not flattered.
First year customer value, channel by channel
Why it matters
Channels look similar on first-order revenue and very different a year later. First-year value by channel tells finance which acquisition spend comes back as margin, and sets a fair ceiling on what each channel can pay for a new customer.
The question to ask
Copy this into Lexi as written.
How to work it out
1. Build a full-year cohort. Take customers acquired 12 to 24 months ago, with one record per person across channels.
2. Tag the first channel. Assign each customer the channel of their first purchase.
3. Total spend and margin. Sum each customer's first-year spend after returns, convert it to gross margin, and divide by customers per channel.
What the answer looks like
Illustrative output on sample data
Illustrative example: how Lexi answers this for a sporting goods retailer. It tracks last year's new customers across channels from their first purchase and measures first-year spend and margin.
- Paid search: 8,000 customers, $260 spend, $109 margin each
- Paid social: 11,000 customers, $160 spend, $54 margin each
- Store: 14,000 customers, $300 spend, $132 margin each
What the data shows
Paid social customers earn half the first-year margin of search customers and barely clear their $45 acquisition cost.
What it means
Store-acquired customers are worth the most, and 30% of them went on to buy online. A channel-only report would credit that spend to ecommerce.
What to do
Hold paid social to the audiences with the best margin, and credit store acquisition with its online follow-on spend.
Would you like the same view over two years?
Frequently asked questions
How is first-year value different from the customer lifetime value formula?
The classic customer lifetime value formula multiplies average order value, purchase frequency and expected lifespan, which needs assumptions about how long customers stay. First-year value measures what a cohort actually spent in 12 months. It is less ambitious, but it rests on real data that finance can audit.
Why use margin instead of revenue for value by channel?
Channels differ in how much discount they rely on. A channel that acquires customers with deep first-order offers can show healthy revenue and thin margin. Margin per customer shows what each channel actually returns, and it is the right figure to compare with acquisition cost.
How old should a cohort be to measure customer value by acquisition channel?
Old enough to have a full year of history, so customers acquired 12 to 24 months ago. Younger cohorts can be tracked against the curve of older ones, but final first-year values need the full window. Refresh the analysis each quarter as a new cohort completes its year.