Customer Lifetime Value (CLV or LTV) refers to the total revenue a business gets or can expect from a single customer account through the entire duration of their relationship with the business. It helps measure long-term business value that is derived from customer retention.

Calculate Customer Lifetime Value ( CLV) 

CLV=Average Purchase Value × Purchase Frequency × Customer Lifespan Customer Lifetime Value (CLV) estimates the total revenue a business expects from a single customer throughout their relationship..

What is considered a good Customer Lifetime Value( CLV)? 

A good CLV exceeds your Customer Acquisition Cost (CAC). 

CLV is related to Customer Acquisition Cost (CAC) (the total cost of acquiring a new customer, including all marketing and sales expenses).

The ratio of CLV and CAC. If the ratio is 3:1 or higher, that means you earn $3 for every $1 spent acquiring a customer. This ensures profitability and long-term business growth.

Benefits of calculating Customer Lifetime Value ( CLV )

 CLV is essential for guiding marketing spending, customer acquisition strategies, and retention efforts by highlighting the most valuable customer segments.

• Get Better Customer Insights: Identifies profitable customer profiles.
• Improved Profitability: Focuses efforts on long-term revenue generation, sales.
• Retention Over Acquisition: Encourages investing in customer loyalty and retention strategies.

Focusing on Customer Lifetime Value ( CLV)  empowers businesses to build deeper relationships and drive long-term growth.