customer lifetime value

Definition

The total revenue a business expects from a single customer account over the entire relationship duration. It's how marketers justify spending $200 to acquire a customer who buys a $15 subscription.

Example Usage

Our customer lifetime value calculations assume people will stay subscribed for 4.7 years, which requires ignoring our 85% annual churn rate and basic mathematics.

Origin

Concept emerged from direct marketing and catalog businesses in the 1980s when customer data became more trackable

Fun Fact

CLV is the metric that allows subscription businesses to burn venture capital for years while claiming profitability is just around the corner.

Source: Direct marketing and CRM industry terminology

Related Terms

Intermediate

Value Proposition

A fancy way of explaining why someone should give you money instead of your competitor. It's the corporate pickup line -- it sounds rehearsed, slightly desperate, and works about 10 percent of the time.

💼 Corporate / Business📣 Marketing / Advertising

Beginner

up-funnel

Marketing activities focused on early-stage awareness and consideration rather than immediate conversion. Where brands spend money talking to people who definitely aren't ready to buy yet.

📣 Marketing / Advertising

Intermediate

A/B Testing

The scientific method of showing two versions of something to see which one sucks less. It's like asking your mom and your friend which outfit looks better, except with statistically significant sample sizes and far less emotional damage.

📣 Marketing / Advertising

Intermediate

sequential messaging

Delivering ads in a specific order to tell a story or build a narrative over time. Because apparently one interruption isn't enough—you need a whole series.

📣 Marketing / Advertising

Intermediate

contextual advertising

Placing ads based on the content of the page rather than user tracking, showing car ads on automotive sites instead of following users around. It's the old-fashioned targeting approach that's suddenly new again as privacy regulations tighten.

📣 Marketing / Advertising

Advanced

psychographic segmentation

Dividing audiences based on psychological attributes like values, attitudes, interests, and lifestyles rather than just demographics. It's the difference between targeting '35-year-old males' and 'anxiety-ridden millennials seeking validation through consumer choices.'

📣 Marketing / Advertising

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