The calculation for customer lifetime value considers a customer’s product or service usage rate, their loyalty to the company, and the firm’s cost to serve that customer over time.
Customer lifetime value (CLV), commonly referred to as lifetime value (LTV), is the profit margin which is expected by the company to earn over the lifetime of their business relationship with the average customer.
In order to calculate customer lifetime value, first of all calculate the lifetime value by multiplying the average value of the sales, the average number of transactions, and the average customer retention period followed by the company.
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