Everything you need to know about Customer Lifetime Value

September 20, 2021.

What is the value of each customer to your business? How can you predict the benefit they will provide while interacting with your products or services?

Incomes a very simple, yet very useful metric designed to do exactly that – Customer Lifetime Value (CLV). It is one of the key metrics to track as a part of taking care of your customer experience program.


CLV is a metric that indicates the total revenue a business can expect from a single customer during their relationship with the business. This means it shows how valuable a customer is to the business not just on a purchase-by-purchase basis, but across the whole customer life cycle.  The metric considers a customer’s revenue value and compares it to the predicted lifespan of that customer. Also, this can help you plan and decide how much money to invest in acquiring new customers and retaining existing ones. You should care about all of your customers, no doubt in that, but the fact is that they are not all of the same value to you.


Now that you understand what this metric is, the question about more details regarding how this can help your business may pop up. First, we all know that right there in the top priorities of every company sits the revenue, and CLV effects it directly. It identifies the specific customers that contribute the most to your revenue which allows you to serve these customers and their specific needs, make them more satisfied and happier, resulting in them pouring in more money into your revenue. Second, CLV helps you boost customer loyalty by keeping you on track with improving your customer support, products and services and loyalty programs. Third, it helps you target your ideal customers. With CLV you can find out which customers spend the most at your business and then define a customer acquisition strategy that targets exactly those type of customers. And last, but not the least, here we have to mention that it reduces customer acquisition costs. It has been proven that by taking care of your most valuable customers a business will achieve higher profit margins, increased CLVs and reduced customer acquisition costs.

There are four steps that go into calculating this metric and they are:

In case you have done the calculation and don’t like the number in front of you – don’t be discouraged. There are ways to improve that CLV and here are just some of them:

  • Invest in your customer experience – CLV depends on every interaction that the customer has with your business, including store visits, customer support, products, services, even how you communicate to them via social media and other media channels. Listening to the customers needs in all of these pin points and improving their experience, guarantees an increased CLV.
  • Make your customer onboarding process super easy – make sure that your customer onboarding process is dictated by the customers needs and is as simple as possible for them to go through.
  • Loyalty program – no matter if you will go for an app or a card or some other way to collect discount points, invest in a good loyalty program. Make sure your customers know you appreciate them and reward their loyalty.
  • Social media – welcome to 2021! Of course, social media will be on this list. This will help with not just your communication towards your clients, but with them gathering information that they need about your business. Make sure you are interactive and quick to response on your social media platforms, because these days your response time could make you or brake you when it comes to a positive brand image and thus customer satisfaction.

Customer Lifetime Value is an incredibly useful metric. It can help you improve your customer experience, build stronger relationships with your customers and increase your revenue. Since it is very simple and easy to understand it can be communicated to different departments in your company and they can use it as a guideline when defining or making the next move on the market, thus overall improving your business.

Team member
Nina Zivkovic
Product Specialist
Team member
Ana Jacimovic
Product Owner
Team member
Aleksandra Vucicevic
Product Specialist

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Saga d.o.o. Belgrade
Member of New Frontier Group
64a Zorana Djindjica Blvd.
11070 Belgrade | SERBIA

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