Customer Lifetime Value (CLV)

By Farris Ramzy | last updated 7th December 2020


What is a CLV?

Customer lifetime value is the total sum of profit a customer will generate for your business throughout their life.

CLV as an Indicator

CLV is used as predictive indicator to a customers future spending, based on their present activity. This is important as it assesses the financial value of a customer, because if you can predict how much profit a new customer will bring to your company, you are able to set upper bounds on marketing spend to generate each new customer.

Key point: As well as increasing profits, a customer returning to your website or store to make numerous purchases is an indicator of good customer service and competitive pricing.

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