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Customer Lifetime Value (CLTV)
The total worth of a customer over the entire period of their relationship with a company, often used to guide investment in customer acquisition and retention.
Implications
The total revenue a company can expect to generate from a customer over the entire duration of their relationship, used to inform customer acquisition, retention, and marketing strategies.
Example
Example: An e-commerce company calculates the CLTV of its top customers to determine how much it can spend on marketing and loyalty programs without sacrificing profitability.
Related Terms
Different from customer acquisition cost (CAC), which measures the cost of gaining a customer, CLTV measures the value that customer brings over time.
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