I use a different method for calculating the "Avg customer lifetime (months)", which is implied by some logic from a great book called The Loyalty Effect: <a href="http://books.google.com/books?id=ctAj_SfSrKIC&printsec=frontcover" rel="nofollow">http://books.google.com/books?id=ctAj_SfSrKIC&printsec=f...</a><p>Using this formula, I get different results for "Avg customer lifetime (months)" than the OP.<p>I calculate the average length of the customer tenure based on the formula: 0.5 = (1-churn%)^t, where "churn%" is the monthly churn rate, and t is time passed in months. Basically, this formula says: when will 50% of the customers be left?<p>You can solve for t:<p>0.5 = (1-churn%)^t<p>ln (0.5) =ln(1 - churn%)^t<p>ln (0.5) =t x ln(1 - churn%)<p>t = ln (0.5) / ln (1 - churn%)<p>You can test this math by calculating how long t is for a churn of 50% (it's 1 month).<p>Using this math, the average tenure for a monthly churn of 1% would be 60 months. The average tenure is useful because you can then do a discounted cash flow analysis on 100% of the cash flows until time t, to calculate the lifetime value of the average customer. So in this case, you would be discounting 100% of 60 months of cash flows.<p>The average tenure goes down rapidly as you increase the churn rate. At 2% churn, the average tenure is 34 months. At 3%, it's 23 months. At 5%, it's 14 months. And at 10%, it's 7 months.<p>If you have enough data, you can use a non-constant churn rate as well, as churn rate definitely goes down over time.