Customer Lifetime Value (CLTV) is a vital metric to consider in any successful marketing plan: it refers to the total revenue a company expects to generate from a customer over the duration of their business relationship.
Companies use customer lifetime value to identify the segments that are most relevant to them. The longer a customer continues to buy, the greater their value.
Customer Lifetime Value is a very important indicator when doctor database analyzing and measuring a company's growth. This metric allows you to measure the time it takes to recover the cost of acquiring a new customer, the cost of sales, and the cost of marketing.
Analyzing the lifetime value of your customers will make sense if you also consider another key metric: Customer Acquisition Cost (CAC) . This figure indicates the investment required to acquire new customers. The higher the CAC, the more profitable the business will be.
Example: If a restaurant customer's CLVT is $100, but the money needed to obtain it is $150, the business could be losing money.
According to HubSpot , acquiring new customers can be 5 to 25 times more expensive than retaining existing ones.