Customer Lifetime Value

The Customer Lifetime Value (CLV) is calculated by multiplying a customer’s Average Order Value (AOV) by the average purchase frequency rate. CLV predicts the value that can be attributed to the entire future relationship with a customer. CLV is important not only because it helps identify and segment the most loyal customers, but also because it tells you how well you’re resonating with your customer base, how much your customers like your products or services, what you’re doing right, and how you can improve. It can also help make decisions around how much to invest in your customers.