Define CLV for YOUR Business: Understand that Customer Lifetime Value represents the total revenue you expect to earn from a customer over the entire duration of their relationship with your business. 
It’s crucial to first define how you'll calculate CLV in your context, considering factors like average purchase value, purchase frequency, and customer lifespan.  Try calculating this TODAY based on what you know about your customer and business.

As an example, you have served 100 customers in the last year.  Of the 100, 50 of them are recurring and 50 have come to you for one time projects, services or purchases.

The lifetime value of the 1x customers would simply be what they paid you for this service/product
The lifetime value of the recurring or returning customers would be based on the frequency at this they return or recur AND the expected periods they will stay with you.

Tip:  Look to shift MORE customers from the 1x to the recurring model.  The value of these customers on the open market (to a buyer) will drastically increase as their LTV increases. 

Utilize your CRM for Better Data: Use a CRM system to track customer interactions (good and bad), purchase history, and behavior patterns. This data is fundamental for analyzing CLV and understanding how different customer segments behave over time.

Segment Your Customers (if applicable): Segment customers based on their purchase behavior, value, and niche. This allows you to tailor marketing efforts, improve customer experiences, and focus on high-value segments to maximize CLV.  For example, if you find your youngest customers return the most, it may be wise to focus your advertising efforts on them as it will increase your LTV of all customers quicker. 

Measure Recurring Revenue as a % of Total Revenue: this is a simple yet effective way to see if you business value is trending in the right direction.  As you know by now, in 100% of industries, buyers will value recurring or returning customers higher.  Be prepared to show your positive momentum and progress here will simple tracking techniques. 

Removing key man risk or owner dependency may be one of the most difficult items to measure and track.  However, we have a few methods that have been effective with Anomaly customers over time.

Measure your Current System Documentation:  as a baseline, divide your business into all of the various segments, including marketing, sales, service, finance, ops etc.  From here, calculate the pure percentage of these functions that DO have written procedures or "SOPs".

Hold yourself or your team accountable to these goals.  After going through a transaction due diligence, we saw how the private equity team reviewed ALL SOPs in place.  We ultimately do not know how this affected value, but they spent significant time reviewing these.  Imagine if our client had NO SOPs documented?

Create SOP Goals:  documenting your company and systems is hard.  Do not expect to document your entire brain or company systems in 1 year.  It takes substantial time.  In some cases, we have had business owners ask us if it is even worth it.

Ultimately, if you want to maximize your enterprise value, you MUST remove key man risk over time. 

We encourage you to watch and rewatch Parts 1-3 of Built to Sell.  The lessons learned in these come from real world, practical situations the Anomaly team has faced over the years.  We are all in it to win it together!