CLV (Costumer Lifetime Value)

Customer lifetime value, or CLV for short, is a key to understanding how your business can achieve sustained success in the competitive business landscape. CLV is a metric that gives you insight into how much each customer is worth to your business over their lifetime as a customer. Understanding CLV is not only a smart business strategy, it's also a way to predict revenue, make informed decisions and improve the customer experience.

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What is CLV?

Customer Lifetime Value (CLV) is an important way companies use to find out how much a customer is worth during their entire time as a customer. Think of it as a way to measure how much a customer contributes to a company's revenue.

To calculate CLV, you usually look at three things:

  1. How long people stay customers with the company
  2. How much revenue the company gets from each customer per year
  3. How much money the company spends on acquiring new customers

When you calculate the three things together, you get an idea of how much the customer is expected to earn for the company over time. This is useful because it helps companies decide how much to spend on attracting and retaining customers.

Example of the calculation:

CLV (Costumer Lifetime Value)

If the CLV is high, it usually means that the customer is very valuable to the company. In that case, the company may be willing to spend more money to keep that customer or attract similar customers. If the CLV is low, it may mean that the company needs to work on improving the customer experience or attracting more valuable customers.

CLV is an important way to measure how the company is doing because it helps predict how much money the company will make from customers in the future. It also allows you to use company resources and marketing more effectively.

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