Customer Lifetime Value is the total worth to a business of a customer over the whole period of their relationship. It’s an important metric as it costs less to keep existing customers than it does to acquire new ones, so increasing the value of your existing customers is a great way to drive growth.
Knowing the CLV helps businesses develop strategies to acquire new customers and retain existing ones while maintaining profit margins.
Calculation Customer LTV
LTV = average value of a purchase X number of times the customer will buy each year X average length of the customer relationship (in years)
Customer Lifetime Value (LTV)
Customer Lifetime Value is the total worth to a business of a customer over the whole period of their relationship. It’s an important metric as it costs less to keep existing customers than it does to acquire new ones, so increasing the value of your existing customers is a great way to drive growth.
Knowing the CLV helps businesses develop strategies to acquire new customers and retain existing ones while maintaining profit margins.
Calculation Customer LTV
LTV = average value of a purchase X number of times the customer will buy each year X average length of the customer relationship (in years)