eCommerce
What is Customer Lifetime Value (CLV)?
- Customer Lifetime Value (CLV)
- CLV is the total revenue a business expects to earn from a customer throughout their entire relationship — a key metric for marketing spend decisions.
What is CLV?
CLV = Average Order Value × Purchase Frequency × Customer Lifespan. It tells you how much each customer is worth over time, helping you decide how much to spend on acquisition and retention.
CLV vs CAC
Customer Acquisition Cost (CAC) should be compared to CLV. A healthy business has CLV:CAC ratio of 3:1 or higher — earning three times what it spends to acquire each customer.
Increasing CLV
Loyalty programs, personalised recommendations, subscription models, excellent after-sales support, and cross-selling increase CLV and improve overall business profitability.
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