Customer Lifetime Value (CLV)

A prediction of the net profit attributed to the entire future relationship with a customer.

What is a Customer Lifetime Value (CLV)?

Customer Lifetime Value (CLV) is a metric used by businesses to determine the total revenue a customer is expected to generate over the entire relationship with the company. It represents the value of a customer to a business over time, taking into account factors such as purchase frequency, average order value, and retention rate. By analyzing CLV, businesses can better understand the profitability of different customer segments and tailor their marketing and customer service strategies accordingly. CLV helps businesses identify their most valuable customers, allowing them to focus on building long-term relationships and increasing customer loyalty. Additionally, CLV can inform decisions related to customer acquisition costs, pricing strategies, and overall business growth. Ultimately, by calculating CLV, businesses can optimize their marketing efforts, improve customer experience, and maximize the profitability of their customer base.