Customer Lifetime Value (CLV): Difference between revisions
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Mara Melão (talk | contribs) (Created page with "Customer lifetime value (CLV) is a metric that estimates the total value a customer brings to a business over the duration of their relationship with the business. It is an important concept for businesses because it helps them understand the long-term revenue potential of a customer, and helps them make decisions about how much to invest in acquiring and retaining customers. == Definition == <math> Customer Lifetime Value (CLV) = (ARPA \times\ Gross Margin) / Churn Ra...") |
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{{RFC_Metric|number= | {{RFC_Metric|number=23/0105|title=Customer Lifetime Value(CLV)|version=0.9|status=proposal|type=metric}} | ||
== See also == | == See also == | ||
Latest revision as of 12:48, 21 February 2023
Customer lifetime value (CLV) is a metric that estimates the total value a customer brings to a business over the duration of their relationship with the business. It is an important concept for businesses because it helps them understand the long-term revenue potential of a customer, and helps them make decisions about how much to invest in acquiring and retaining customers.
Definition
Details
- ARPA
- Average Revenue Per Account
- ARPA is calculated by dividing the total revenue generated by the number of customers or accounts in the same period
- Gross Margin
- Financial metric that measures the profitability of a company's products or services after deducting the costs of the service
- Costs of service might include application hosting costs, customer service, third-party software licenses, etc.
- Churn Rate
- The rate at which customers or subscribers discontinue using a product or service over a given period of time.
Standardization Status
Request for Comments (RFC): 23/0105 - Customer Lifetime Value(CLV)
Type: metric
Version: 0.9
Status:proposal