Customer Lifetime Value

Customer Lifetime Value may be a prediction of all the value a business will derive from their entire relationship with a customer. Because we don’t know how long each relationship will be, we make a great estimate and state CLV as a periodic value — that’s, we usually state “this customer’s 12-month (or 24-month, etc) CLV is $x”. Customer lifetime value can also be defined as this dollar value of a customer relationship, using the present value on the projected future cash flows on the customer relationship.