Glossary

Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV or LTV) is the total revenue a business can expect from a single customer over the entire duration of their relationship. It is one of the most important metrics for understanding long-term business health.

How to Calculate CLV

Simple CLV = Average Revenue per Month × Average Customer Lifespan in Months

For example, a gym member paying $50/month who stays for 18 months has a CLV of $900.

Why CLV Matters

CLV tells you how much you can afford to spend acquiring a new customer. If your CLV is $900, spending $150 on acquisition makes sense. If it's $200, that same spend doesn't work. CLV also helps you prioritize retention — a 5% increase in retention can increase profits by 25-95%.

How to Increase CLV

  • Improve retention to extend customer lifespan
  • Upsell and cross-sell additional products or services
  • Increase visit frequency and engagement
  • Build loyalty programs that reward repeat behavior
  • Deliver personalized experiences that deepen the relationship