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.

Related Terms

• Customer Relationship Management (CRM)
• Lead Generation
• Retention
• Key Performance Indicator (KPI)
• Gross Merchandise Volume (GMV)