Analytics•3 min read
Customer Lifetime ValueAlso known as: CLV or LTV
Definition
Predicted total revenue a business can expect from a single customer over time.
Detailed Explanation
Customer Lifetime Value (CLV or LTV) is the predicted total revenue a business can expect to earn from a single customer account throughout their relationship with the company. Understanding CLV helps businesses determine how much they can spend to acquire customers (CAC) while remaining profitable.
Key Points to Remember
- 1Calculate: Average order × Frequency × Lifespan
- 2Higher CLV justifies higher CAC
- 3Retention increases CLV
- 4Focus on high CLV customer segments
- 5Vital for subscription businesses