The ABCs of CLV
Get definitions for commonly used terms and acronyms in the customer intelligence space. For more detailed resources, check out the CLV Academy.
Customer Lifetime Value (CLV) is a metric that estimates how much value (usually revenue or profit margin) any given customer will bring to your business over the course of the total time they interact with your brand — past, present, and future.
Lifetime Value (LTV) is the lifetime spend of customers in aggregate. LTV is an aggregate metric, unlike CLV, which is calculated at the individual-customer level.
Customer Acquisition Cost (CAC) is the total cost of acquiring a new customer. CAC is made up of your sales and marketing costs.
CLV to CAC
CLV to CAC is the ratio of Customer Lifetime Value to Customer Acquisition Cost. This metric helps you optimize your marketing campaigns to acquire profitable customers.
A group of customers that behave similarly or share a defining characteristic.
Churn is the rate at which customers stop purchasing or doing business with your company.
A representation of a group of leads or customers with similar characteristics, features, and / or behaviors.
A group of people on a social network that are similar to a group of your existing customers, based factors like demographics, behavior, location, etc.