Customer lifetime value (CLV) is an important metric for any business owner to understand the performance of their marketing campaigns and business in general. By understanding this important metric, you will be able to improve marketing campaigns, prioritize digital marketing investments and increase sales by producing better content for your customers.
What does customer lifetime value mean?
Customer lifetime value (CLV) is the total profit generated by a customer during their time with your company. It’s similar in concept to revenue, but instead of focusing on how much money you bring in, CLV looks at how much value they bring in. In other words:
- Customer Lifetime Value = Total Profit Generated by a Customer during the period of their lifetime
- Total Profit Generated by a Customer = The total amount of money spent by them throughout their relationship with your business
How to calculate CLV for your business?