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What is customer lifetime value?

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Quick answer

Customer lifetime value (CLV) is the total profit a business expects to earn from a single customer over the whole relationship. It helps companies decide how much they can spend to win and keep customers. CLV estimates total profit from a customer over time.

Key things to understand

  1. CLV estimates total profit from a customer over time.
  2. It accounts for repeat purchases, not just the first sale.
  3. It guides how much to spend acquiring and retaining customers.
  4. Raising retention and order value increases CLV.

People also ask

What is customer lifetime value?
The total profit a business expects from one customer across their entire relationship.
Why does customer lifetime value matter?
It shows how much you can afford to spend to acquire and retain customers profitably.
How do you increase customer lifetime value?
Improve retention, encourage repeat purchases, raise average order value, and deepen loyalty.