Customer Lifetime Value (CLV)
Category: Strategic
Estimates the total revenue a company expects from a customer over the entire business relationship.
What it Measures ?
How much one customer earns us over time.
Relevant StakeHolders
Sales Leadership, Marketing Heads
Why it Matters ?
Estimates total revenue from a customer relationship, guiding retention and budget strategy.
In-depth Use Case / Real-world Example
A manufacturer of water purifiers sells to retail chains. If one retail customer purchases products worth ₹10 lakhs per year and typically stays for 5 years, the CLV is ₹50 lakhs. This KPI helps justify investments in customer service and retention by showing the long-term value of relationships.
Sample Formula
Total Revenue per Customer over Lifetime - CAC