What is Customer Lifetime Value (CLV)?

Customer lifetime value describes the monetary value expected from an individual customer over the course of their entire business relationship.

The customer lifetime value (CLV) comprises all expenditures made by a customer from the beginning of the customer relationship and thus includes all purchases, services, and add-ons. The CLV thus helps to estimate how valuable a customer is, or how valuable he will become in the course of the business relationship.

Calculation of Customer Lifetime Value

CLV = Average purchase value x Number of purchases per year x Average customer relationship in years