Customer Lifetime Value: What Is It and How To Increase It
Customer Lifetime Value: What Is It and How To Increase It
June 2022
3 min read
Customer Lifetime Value (CLV) is a financial projection of profits a company expects to earn over a set duration of a business relationship with a single customer.
Customer lifetime value is the result of an effective acquisition, engagement, and retention strategy. A strong CLV is essential to the sustainable growth and success of a DTC brand.
If you’re not convinced that retaining customers is so valuable, consider research done by Frederick Reichheld of Bain & Company (the inventor of the net promoter score) that shows increasing customer retention rates by 5% increases profits by 25% to 95%.
Customer Lifetime Value Calculation
Tips to Increase your Customer Lifetime Value
Improve your product
Offer amazing Customer Service
Invest in your packaging, it can make a huge difference
Retarget your customers with email marketing
Set up a customer loyalty program
Customer Lifetime Value Statistics
A 5% increase in retention produces a 25% increase in profit.
Acquiring a new customer is between 5x and 25x more expensive than retaining an existing customer.
The probability of converting an existing customer is between 60%-70%.
Existing customers spend 67% more on average than new customers.
76% of companies see CLV as an important concept for their organisation.