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Glossary overview

Customer Lifetime Value

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.