The Customer Lifetime Value (CLV) measures the discounted profit streams of a customer across the entire customer life cycle. The CLV represents an application of the principles of contemporary finance to the evaluation of customer relations. The concept is aimed at the assignment of a profitability figure to the customer which is based on all prospective and directly attributable inpayments and outpayments. This procedure also accounts for effects that go beyond customer's own transactions, for example referring the company to other potential customers through word of mouth.
Profitability of a customer during the lifetime of the relationship, as opposed to profitability of one transaction.
A measure of customer loyalty based on customer revenue or profits a customer generated over the length of the customer relationship rather than a single time period.
Value of a customer to a firm over the life of the customer-firm relationship.
Customer lifetime value (also variously referred to as lifetime customer value or just lifetime value, and abbreviated CLV, LCV, or LTV) is a marketing metric that projects the value of a customer over the entire history of that customer's relationship with a company. Use of customer lifetime value as a marketing metric tends to place greater emphasis on customer service and long-term customer satisfaction, rather than on maximizing short-term sales.