Customer Lifetime Value (CLV) is a metric that quantifies the total revenue a business expects to earn from a customer throughout their entire relationship. It involves predicting the monetary value a customer will bring over time, factoring in their purchasing patterns, frequency, and duration of engagement.
CLV is crucial for businesses to assess the long-term profitability of acquiring and retaining customers. By understanding the value each customer contributes, companies can optimize marketing strategies, customer retention efforts, and overall business decisions. High CLV indicates a strong customer base, while low CLV may prompt companies to reassess their customer acquisition and retention strategies. Ultimately, focusing on maximizing CLV helps businesses enhance customer relationships and drive sustainable, long-term financial success.
