Customer Lifetime Value (CLV) is the amount of profit a customer delivers to your company for as long as the customer is buying from you. It’s typically calculated as the net present value (the value in today’s dollars) of the profit you’ll earn from a customer’s total purchases over time. When you know your CLV, you have an extremely powerful tool that helps with:

  • Acquisition:  Gain a better understanding of what to spend to acquire a customer.
  • Targeting:  Understand which customer segment delivers the most profit, and focus increased marketing effort on that segment.
  • Return on investment:  Use CLV in ROI calculations for marketing campaigns to achieve a much more accurate measure of campaign performance.
  • Customer retention:  Determine how much to spend to profitably retain customers.
  • Single-customer profitability:  Calculate the profitability of an individual customer.

Use CLV for planning all marketing campaigns and for projecting and measuring campaign results.

CLV Value

When you know what a customer is worth, you have an extremely powerful tool that helps you improve acquisition, retention, targeting, profitability and ROI.

CLV becomes more important as your marketing budget increases and your customer base grows. Yet even an early-stage company can benefit from a simple CLV estimate.

With Growth Panel, you can calculate CLV for your entire customer base, specific segments and individual customers. Using CLV can help you to make better marketing investment decisions and to speak in terms of marketing investments and returns.

CLV Tools with Growth Panel

  • Introduce the CLV Formula:  Gain an understanding of CLV components and how they’re used.
  • Determine Customer Lifetime:  Calculate the average length of time a particular customer group can be expected to make purchases from you. This “lifetime calculator” is a key component of CLV. 
  • Calculate CLV:  Use inputs to calculate CLV.
  • Analyze CLV for a Single Customer: Determine how much to invest in retaining a specific customer.
  • Use CLV for Strategic Decisions: Use CLV to determine which market segments to grow and how to adjust marketing investments in low-value segments.

Your might need to use Customer Lifetime Value if:

  • You don’t currently calculate CLV
  • You make ad hoc decisions about your marketing campaign investments
  • You don’t focus your marketing campaigns on your most profitable customer segments
  • A few large customers consume substantial resources and you’re not sure if retaining those customers is worthwhile