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What is meant by customer lifetime value Mcq?

Definition: Customer Lifetime Value or CLTV is the present value of the future cash flows or the value of business attributed to the customer during his or her entire relationship with the company.

What is CLV and what are its components?

Customer lifetime value (CLV) is a measure of the average customer's revenue generated over their entire relationship with a company. Comparing CLV to customer acquisition cost is a quick method of estimating a customer's profitability and the business's potential for long-term growth.

What is CLV formula?

Customer Lifetime Value is calculated by multiplying your customers' average purchase value, average purchase frequency, and average customer lifespan.

What is CLV and what are its components?

Customer lifetime value (CLV) is a measure of the average customer's revenue generated over their entire relationship with a company. Comparing CLV to customer acquisition cost is a quick method of estimating a customer's profitability and the business's potential for long-term growth.

What is customer lifetime value and why is it important?

CLV is the amount of money a customer is predicted to spend with your business for the duration of your relationship with that individual. It's an important metric, and the way you approach it can both define your business and could vary significantly depending on what you're trying to get from your business.

What are the three components of CLV?

The CLV model has only three parameters: (1) constant margin (contribution after deducting variable costs including retention spending) per period, (2) constant retention probability per period, and (3) discount rate.

What is meant by customer lifetime value?

Customer lifetime value (CLV) is the total amount of money a customer is expected to spend in your business, or on your products, during their lifetime. This is an important figure to know because it helps you make decisions about how much money to invest in acquiring new customers and retaining existing ones.

What is a good CLV value?

It is a good range if you are able to achieve a CLV that falls between 3-5 times your cost of customer acquisition. So, for example, if you are spending an average of $150 in acquiring a new customer, you should aim for a CLV of at least $450!

Customer lifetime value ppt 2025

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