Question

What is Customer Lifetime Value? Why is it important?

Answer 1

Customer Lifetime Value is the value or profit contributed by a customer to the business throughout the lifetime. It helps to understand how much a customer is ready to spend and decide how much the company can spend while serving the customer. Customer Lifetime Value is very important to determine the success of the business and the future growth. The important business decisions including financial and expansion decisions are made by analyzing Customer Lifetime Value. The customer support is very much essential for the business growth and the customer satisfaction is also directly related with Customer Lifetime Value. The product development ideas and marketing decisions also depends upon the customer Lifetime Value and the sales and revenue can be improved only by adopting strategies that would improve customer loyalty retaining the existing customers. It becomes more significant as acquiring new customers can be more costly for the company and the business can sustain only by retaining the existing customers.