CLV
Customer Lifetime Value

Customer lifetime value (CLV) is a financial metric that is used to estimate the total amount of money that a customer is likely to spend on a business's products or services over the course of their relationship with the business.

CLV is often used to compare the value of different customers or to track the value of a single customer over time. It can also be used to prioritize marketing efforts and allocate resources more effectively, as businesses can focus their efforts on acquiring and retaining customers with higher CLVs.

How to Calculate:

It is calculated by multiplying the Average amount of Money that a customer spends on a business's products or services per purchase (also known as the Average Purchase Value or APV) by the number of purchases that the customer is expected to make over the course of their lifetime (also known as the Purchase Frequency (PF)) and then multiplying that number by the length of time that the customer is expected to continue making purchases (also known as the Customer Lifespan (CL)).
For example, if a business has an average purchase value of $100, a purchase frequency of 4 purchases per year, and a customer lifespan of 10 years, the CLV for that customer would be $4,000 ($100 * 4 * 10). CLV is an important metric for businesses to understand, as it can help them identify opportunities to increase the value of their products or services, increase customer loyalty, and improve their overall financial performance.