What is customer lifetime value?

Did we find a definition of customer lifetime value?

If we are going to understand customer lifetime value we will need a definition and we found one at QualtricsXM.com. What they tell us is that “CLV or customer lifetime value is the total worth to a business of a customer over the whole period of their relationship.” What they are telling us that this is the total amount of money that you generate for every customer that you win. Easy

Why is customer lifetime value so important?

Which brings us straight to the question why is customer lifetime value so important? Well, customer lifetime value goes to profitability. If you saw episode number 12 what is cost of customer acquisition? you will know that you are investing an amount of time, an amount of energy and most importantly an amount of money in acquiring new customers. Clearly, the more money that you generate back from each of those customers the more profitable your business will be.

When is customer lifetime value useful?

Which brings us then to point number three which is the question when is customer lifetime value used?

How do you calculate customer lifetime value?

If you are hearing me and you’re thinking yes customer lifetime value sounds like a really useful and really important thing for me to understand in my business; the only thing is that I don’t know how to calculate the lifetime customer value or the customer lifetime value. You need to know that this is a super, super simple sum. All you need to do if you’re doing this for the first time in your business is go back to the very beginning of your business and look at the total sales income; all of the money that you have generated in your sales and then you simply divide that by the total number of customers that you have had during that period.

How do you increase your customer lifetime value?

Which brings us then to point number five which is the question that you really want the answer to which is how do you increase your customer lifetime value.

Did we define lifetime customer value effectively?

If you are still with us well done, you now know exactly what customer lifetime value is; you know why customer lifetime value is so important; you know when to use customer lifetime value; you know how to calculate customer lifetime value and you know how to drive up your customer lifetime value.

What should you do if you have found this interesting or useful?

If you have found this video interesting or useful please take a second to check out video number 14 what is customer analysis?

Martin Henley

Martin has built a reputation for having a no nonsense approach to sales and marketing and for motivating audiences with his wit, energy, enthusiasm and his own brand of audience participation. Martin’s original content is based on his very current experience of running effective marketing initiatives for his customers and the feedback from Effective Marketing’s successful and popular marketing workshops.

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Martin has built a reputation for having a no nonsense approach to sales and marketing and for motivating audiences with his wit, energy, and enthusiasm.

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Martin Henley

Martin Henley

Martin has built a reputation for having a no nonsense approach to sales and marketing and for motivating audiences with his wit, energy, and enthusiasm.

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