customer lifetime value

Definition

The total revenue a business expects from a single customer account over the entire relationship duration. It's how marketers justify spending $200 to acquire a customer who buys a $15 subscription.

Example Usage

Our customer lifetime value calculations assume people will stay subscribed for 4.7 years, which requires ignoring our 85% annual churn rate and basic mathematics.

Origin

Concept emerged from direct marketing and catalog businesses in the 1980s when customer data became more trackable

Fun Fact

CLV is the metric that allows subscription businesses to burn venture capital for years while claiming profitability is just around the corner.

Source: Direct marketing and CRM industry terminology

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