Customer Lifetime Value (CLV) is the net profit that a company makes from their typical client. When customers are divided into categories, it reveals the most profitable segments – the higher the value, the greater the profit. CLV helps determine the best pricing, marketing spend, and retention strategies. There are many ways to calculate Customer Lifetime Value. The formulas vary according to a company’s age and size, as well as the data available. The simple Average Revenue Per User (ARPU) formula predicts a customer’s annual value based on a previous period. Free calculators are available online.
