Customer Lifetime Value (CLV or CLTV) is a crucial metric that quantifies the total predicted revenue a company can expect to earn from a customer throughout their entire relationship. It takes into account the value of the customer’s purchases, the frequency of their transactions, and the expected duration of their engagement with the company. Analyzing customer data trends can guide a company to reallocate particular resources to focus on sections of the customer journey that will provide the highest ROI. Key components include:
Purchase History: The total amount of money a customer has spent on the company’s products or services over time.
Frequency of Transactions: How often a customer makes a purchase or uses the company’s services.
Customer Retention Period: The estimated duration for which a customer is expected to continue doing business with the company.
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