Customer lifetime value (CLV) is a metric that calculates the total value a customer brings to a business over their lifetime. CLV is an important metric for businesses to understand because it allows them to make informed decisions about how much to spend on customer acquisition and retention efforts.
CLV is calculated by estimating the revenue a customer will generate over their lifetime and subtracting the cost of acquiring and serving that customer. The resulting figure provides a rough estimate of the customer's overall value to the business. By understanding CLV, businesses can focus their resources on acquiring and retaining high-value customers while minimizing their investment in low-value customers.