What Is Customer Lifetime Value (CLV) and How To Calculate It

Customer lifetime value (CLV) is a crucial metric for businesses of any size. It provides insight into the total revenue a business can expect from a single customer account throughout the business relationship, taking into account the customer’s revenue value and the company’s predicted customer lifespan.

In this guide, we will walk you through the steps to calculate customer lifetime value, including what data you need and how to interpret the result. We’ll also provide strategies for improving your CLV and optimizing your business’s revenue potential.

What is Customer Lifetime Value?

Customer lifetime value, or CLV, is a metric that indicates the total revenue a business can reasonably expect from a single customer account throughout the business relationship. It considers a customer’s revenue value and compares that number to the company’s predicted customer lifespan.

The longer a customer continues to purchase from a company, the greater their lifetime value becomes.…