Armin Gögele, last updated on June 30, 2023
Customer lifetime value (CLV or CLTV) is a gauge of the profit associated with a particular customer relationship. Its calculation is based on past activities as well as on the prediction of future cash flow. The result is an average value that indicates the revenue a business can expect from a single customer account. Calculating customer lifetime value is important since it helps determine high-value customers and implement online marketing strategies in order to promote customer loyalty. High customer lifetime value can justify a budget increase related to support services offered to a certain, high-value customer. There is a distinction between a customer’s actual value and a customer’s potential value. While the customer’s actual value regards only revenue a customer generates for a business, the customer’s potential value includes the total revenue, event that generated for competitors.
Benefits of Customer Lifetime Value in Hotel Marketing
- Long-term profitable guest retention and relationships
- Control and optimization of marketing programs and budget
- Assessment of current and future guest value
- Utilization of up-selling and cross-selling potentials