Customer Lifetime Value (CLV)

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What does CLV stand for?

Customer Lifetime Value

How is CLV calculated?

By multiplying average purchase value by purchase frequency and customer lifespan

Why is CLV important for businesses?

To estimate the profitability of acquiring and retaining customers

What does a high CLV indicate?

High value and loyalty of customers

Study Notes

Customer Lifetime Value (CLV)

  • CLV stands for Customer Lifetime Value, which represents the total value a customer is expected to bring to a business over their lifetime.

Calculating CLV

  • CLV is calculated by considering factors such as the average order value, purchase frequency, and customer lifespan.

Importance of CLV for Businesses

  • CLV is crucial for businesses as it helps them understand the long-term value of their customers, enabling them to make informed decisions about customer acquisition and retention strategies.

Indications of a High CLV

  • A high CLV indicates that customers are loyal, make repeat purchases, and are likely to continue doing business with the company for an extended period, resulting in increased revenue and profitability.

This quiz tests your knowledge about Customer Lifetime Value (CLV), including its definition, calculation, and significance for businesses. It also explores the implications of a high CLV.

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