Customer Lifetime Value (CLV), referred to as lifetime value (LTV), is the profit margin a company expects to earn over the entirety of their business relationship with the average customer. It provides a benchmark against growth goals and a vivid indication of company value
Customer Lifetime Value (CLV) = Total Customer Revenue – Total Customer Costs
Understanding CLV helps to answer the following key questions
How much can we comfortably spend on marketing and sales for customer acquisition?
How much should we spend on customer service to retain an existing customer?
Who are our most valuable customers and how can we better target this demographic for future sales?
Build loyalty & know your customers
Find opportunities to deliver value:
Reward your customers
Provide communications options