Customer Lifetime Value (CLV/LTV)

Customer Lifetime Value (CLV or LTV) is a metric that represents the total net profit a company can expect to earn from an average customer throughout their entire relationship with the business. It considers a customer's revenue value and subtracts the costs of acquiring (Customer Acquisition Cost (CAC)) and serving them. Understanding CLV helps businesses make decisions about how much to invest in customer acquisition and retention. A high CLV indicates valuable, loyal customers and is a key indicator of business health and Brand Loyalty.