What is Customer Lifetime Value and Why Is It Important?
Lifetime Value (LV) helps to determine the economic value a customer brings over their “lifetime” with the business. At the heart of understanding LV lies the recognition that a customer does not represent a single transaction but a relationship that is far more valuable than any one-time exchange.
However, LV is not about any one customer; it is about stepping back and taking a look at your customer base as a whole — understanding that while some never return and some never leave, on average there is a typical customer lifetime and that lifetime has a specific economic value.
Understanding the Lifetime Value of your customers is incredibly important for customer service professionals and for businesses of all types. Why?
Because if you don’t know what a client is worth, you don’t know what you should spend to get one or what you should spend to keep one.
If you prefer to read than listen, check out the original post Idiots Guide To Life Time Customer Value
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