Customer Lifetime Value is the estimated total value a customer brings to a business over the entire duration of their relationship. CLV CLV (Customer Lifetime Value), LTV (Lifetime Value), and LCV (Lifetime Customer Value) are often used interchangeably in marketing and business analytics, and they all have the same meaning. Basic CLV Formula CLV = Average Purchase Value × Purchase Frequency × Customer Lifespan Example Average purchase value = $100 Purchases per year = 5 Customer lifespan = 4 years CLV = 100 × 5 × 4 = $2,000 More Accurate Formula Many companies include gross margin. CLV = Average Revenue per Customer × Gross Margin × Customer Lifetime Example : Revenue = $1,200 Gross Margin = 40% Lifetime = already included in revenue CLV = 1,200 × 40% = $480 profit Subscription Business Formula For SaaS businesses: CLV = ARPU × Gross Margin ÷ Churn Rate Example Monthly ARPU = $40 Gross Margin = 80% Monthly Churn = 4% CLV = 40 × 0.80 ÷ 0.04 = $800 ...