Lifetime Customer Value (CLV) is the total sum of all profits generated by a customer over their lifetime. CLV can be calculated as the total revenue generated from a customer, minus the costs associated with acquiring and servicing that customer. The calculation of CLV is based on a time period, and it helps businesses to decide whether they should invest in a given customer.
There are many different types of customers in the market who could have different levels of CLV. For example, there are customers who buy products or services infrequently and there are those who buy products or services frequently. The CLV for these two types of customers is going to be very different because one type will generate much more revenue than the other type over their lifetime.