Calculate average lifespan

Question

We want to calculate the average lifetime of our customers. For each customer we know when they joined, whether they are still with us and if not, what date they left us.

Our company has exponential growth, so most months we acquire more customers than we acquired the month before.

We tried to just take the average of all lifespans but that gave us a bad result because all the many customers that have signed up recently only have had a short lifespan.

How can this be calculated (if possible explained in laymen's terms as I'm not a mathematician)?

Answer 1

Weighted average:

1. Compute the distribution of the amounts of customers by the lifespans (values from the "Customers" field, divided by their total sum).
2. Compute the mean of this distribution (multiply each of the values by corresponding lifespans, and sum the products up).

In other words: multiply the "Customers" and "Lifespan" columns pairwise, add the values together, and divide the sum by the total amount of customers.