Customer lifetime value (CLV)

Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV) is the total amount of money a customer is likely to spend on your business over time. It’s not just about one sale - it’s about how often they come back and how much they spend each time. The longer a customer stays with you, the more valuable they become.

Why it’s important for your business

Keeping customers around is usually cheaper than finding new ones, and CLV helps you see how much each customer is worth in the long run. If you know who your best customers are, you can focus on keeping them happy with better service, rewards, or special offers. The higher the CLV, the more stable and profitable your business becomes.

Examples

1. E-commerce: A clothing store notices that customers who join their loyalty program shop more often, so they offer extra perks to keep them engaged.
2. Finance: A bank sees that people with both checking and savings accounts stick around longer, so they create bundle deals to encourage customers to use more services.
3. Food Delivery: A delivery app realizes that users who subscribe to free delivery order twice as much, so they promote the subscription to more customers.

Focusing on CLV helps businesses build long-term relationships with customers instead of just chasing one-time sales.

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