What is Customer Lifetime Value (CLV)?
Customer Lifetime Value (CLV) is the total amount of profit a business expects from a customer throughout their relationship. It guides acquisition spend, retention strategy and pricing decisions. A healthy CLV:CAC ratio is 3:1 – meaning each customer should generate at least three times what it cost to acquire them.
CLV = Average Purchase Value × Purchase Frequency × Customer Lifespan
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Revenue & purchase behaviour
Total revenue generated for the period under review.
Total number of transactions or purchases made by customers.
Number of customers who made purchases in the period.
Customer retention
Cost of acquiring a single customer.
Margin
Percentage of revenue remaining after costs.
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