The Goal: Work out your Member Lifetime Value (MLV) — the monetary value of a member across the time they are projected to stay with you.
Before You Begin:
- You need permission to run reports, so that you can run the Total Spending by Contact Report.
- You need your operating costs for the period. Your accountant can provide this figure.
- You need your member count and your average membership tenure. Work these out as described in Retention Rate and Average Membership Tenure (AMT).
How Member Lifetime Value is calculated
Member Lifetime Value measures what a member is worth to you, based on how long a member typically stays. It combines what your members actually pay you with how long they stay.
Calculation: Net member-paid revenue ÷ number of members × AMT = MLV
Step-by-Step Instructions
- Go to Reports, click All Reports and open the Total Spending By Contact Report.
- Set Membership Status to Active and Courtesy, then click the Run Report button. The results show all dues and non-dues revenue generated by your members.
- Subtract your operating costs from that total. The result is your net member-paid revenue.
- Divide the net member-paid revenue by your number of members.
- Multiply the result by your average membership tenure. That figure is your Member Lifetime Value.
Example
In a single year, 3,000 members collectively paid $550,000 in dues and contributed $325,000 in non-dues revenue. Operating costs were $650,000 and the organization's average membership tenure was 17 years.
- $550,000 + $325,000 = $875,000 — dues revenue plus member-generated non-dues revenue
- $875,000 − $650,000 = $225,000 — total member-generated revenue minus total operating costs
- $225,000 ÷ 3,000 = $75 — net member-generated revenue divided by number of members
- $75 × 17 = $1,275 — average member-contributed revenue multiplied by average membership tenure
Member Lifetime Value = $1,275
Common Pitfalls
- Using gross revenue: The calculation needs net revenue. Subtract operating costs before you divide, or the value will be far too high.
- Leaving out courtesy members: Set Membership Status to both Active and Courtesy, so the report covers everyone whose spending counts.
- Mixing periods: The revenue, the operating costs and the member count must all come from the same period.