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Customer lifetime value

💼 Business By CampusDown Wiki Editorial Team Last updated
Customer lifetime value is the present value of the profit a customer is expected to generate over the whole relationship.
Contents
  1. 1. Customer lifetime value
  2. 2. Frequently asked questions
  3. 3. References

Customer lifetime value

CLV (LTV) is the present value of expected profit from a customer over the relationship, a core metric in CRM. Simple formula: average order × purchases per year × margin × lifespan. With margin m, retention r and discount rate d, CLV ≈ m·r/(1+d−r). Comparing with customer acquisition cost (CAC) gives the LTV/CAC ratio. Increase CLV via retention (Reichheld & Sasser, 1990), cross-selling and subscriptions; remember estimates depend on assumptions and vary by cohort.

Frequently asked questions

Are LTV and CLV the same?
Yes.
What is a good LTV/CAC?
It varies by industry; CLV should comfortably exceed CAC.

References

  1. Gupta, S., Hanssens, D., Hardie, B., et al. (2006). Modeling customer lifetime value. Journal of Service Research, 9(2), 139–155.
  2. Reichheld, F. F., & Sasser, W. E. (1990). Zero defections: Quality comes to services. Harvard Business Review, 68(5), 105–111.
  3. Kumar, V., & Reinartz, W. (2016). Creating enduring customer value. Journal of Marketing, 80(6), 36–68.

Reports and materials that use this theory (Korean)

There are no materials dedicated to this theory yet, but you can search related reports in the CampusDown library (Korean).

Find more reports · Search '고객생애가치' on CampusDown →
Customer Relationship Management (CRM)Customer relationship management (CRM) explained: the relationship-marketing shift from acquisition to retention, customer lifetime value, the initiation–maintenance–termination process, operational, analytical and collaborative CRM, and why CRM succeeds or fails.💼 BusinessMarketing Mix (4Ps and 7Ps)The marketing mix: Borden's concept, McCarthy's 4Ps (product, price, place, promotion), Booms and Bitner's 7Ps for services (people, physical evidence, process), Lauterborn's 4Cs, and how to analyse a firm's mix.💼 BusinessLong tailWhat the long tail is, Chris Anderson’s argument, how it differs from the 80/20 Pareto principle, online retail and streaming examples, long-tail keywords for small shops, and criticisms such as the superstar effect.💼 BusinessBrand equityBrand equity is the added value a brand name gives a product, making consumers rate it more highly and buy it more willingly.💼 Business

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This article was last updated on October 24, 2026. It is based on widely recognized original works and textbooks; when citing it in a paper, please check the original sources listed in the references.