Question 1

What is Customer Lifetime Value (CLV)?

Accepted Answer

Customer Lifetime Value (CLV or LTV) measures the total revenue you can expect from a single customer throughout their entire relationship with your business. It helps you understand how much to invest in customer acquisition.

Question 2

How do I calculate CLV?

Accepted Answer

The basic formula is: CLV = Average Order Value × Purchase Frequency × Customer Lifespan. For a more accurate calculation, multiply by your gross margin percentage to get the profit-based CLV.

Question 3

Why is CLV important for my business?

Accepted Answer

CLV helps you determine how much to spend on customer acquisition (CAC), identify your most valuable customer segments, and make data-driven decisions about retention strategies. A healthy business typically has a CLV:CAC ratio of 3:1 or higher.

Customer Lifetime Value (CLV) Calculator

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