Businesscalendar_todayLast updated: Apr 2026
What is Customer Lifetime Value?
/ˈkʌstəmər ˈlaɪftaɪm ˈvæljuː/
Customer Lifetime Value (CLV or LTV) is the total revenue a business can expect from a single customer throughout the entire duration of their relationship. It guides how much it makes sense to spend to acquire each customer.
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Everyday Example
If a coffee shop customer buys £4 coffee three times a week for 10 years, their lifetime value is roughly £6,240. Knowing this makes it rational to offer a £20 new customer discount.
publicReal-World Application
“Amazon Prime members spend roughly twice as much annually as non-Prime customers and stay subscribed for years — making each Prime subscriber's lifetime value extremely high, justifying Amazon's investment in the programme.”
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Did you know?
The metric was formalised in the 1990s in database marketing but became central to internet business models in the 2000s, where acquisition cost and retention could be precisely measured.
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Key Insight
The fundamental rule: Customer Acquisition Cost (CAC) must be significantly less than CLV. If it costs £100 to acquire a customer worth £50, no amount of growth will save the business.
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