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Home » Customer

Customer lifetime value (CLV) explained

Submitted by on Thursday, 22 December 2011No Comment

Customer Lifetime Value (or CLV) is a key metric for any business – but one that is too often ignored.

This neat graphic (below), provided by kissmetrics.com, summarises in one simple chart how to calculate Customer Lifetime Value.

Customer Lifetime Value (also covered in more depth in our Customer Experience Maximisation training programme), is critical to understand for the following reasons:

  • It helps you calculate how much you can really afford to spend on your marketing budget
  • It enables you to work out how much low customer engagement is really costing your business – and how much you can invest to solve it.
  • It is the most essential tool for customer segmentation – basically, how to work out the customers you most would like to attract, or create.

The graphic is self-explanatory – what do you think? (Feel free to leave your comments below).

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Customer Lifetime Value (CLV)

 

 

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