Customer Lifetime Value (CLV)

What is Customer Lifetime Value (CLV)?

Customer Lifetime Value (CLV) is a metric that represents the total amount of revenue a business can expect to earn from a single customer account over the entire duration of their relationship. CLV helps businesses understand the value of acquiring and retaining customers and informs marketing strategies, product development, and customer service efforts.

How to Calculate CLV

• Average Purchase Value: Total revenue divided by the number of purchases.
• Purchase Frequency: Average number of times a customer makes a purchase over a period.
• Customer Lifespan: The average length of time a customer continues to purchase from the business.

Related Terms and Concepts

Customer retention, lifetime value, recurring revenue, customer acquisition cost