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Metric Glossary
Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV)

How the CLV is defined and calculated

Valentine Strunz-Happe avatar
Written by Valentine Strunz-Happe
Updated over a week ago

The current monetary value of your customers.


Formula

Customer Lifetime Value = Contribution Margin 2 / Customers

Explanation

The current monetary value you get from each customer you acquire after all variable costs needed to fulfill his orders are deducted (but not including marketing).

Through that it differs from the Customer Lifetime Revenue which does not remove any variable costs.

This KPI is sometimes abbreviated as CLV.

Notes

When displaying CLV, we usually use the Retention Report behaviour of the Date Range as it allows for a better analysis,

If that's the case, knowledge article of the respective report will always say so.


When looking at this value make sure to take the following things into consideration:

  1. This number is always changing - as your customers keep placing repeat orders there CLV will increase.

  2. Be careful when comparing different time period. When you select a Date Range, we use that Date Range to filter out customers that placed their first order in that Date Range but include their complete purchasing activity, until today, to calculate the CLV. That already makes comparison easier. However, customers that have placed their first order two years ago, had more time to place repeat orders and therefore their CLV is very likely going to be higher compared to customers that placed their first order recently. To remove this bias against recently acquired customers make sure to look at the Predicted Customer Lifetime Value (pCLV)


Sometimes, this metric will be displayed in conjunction with a time period - eg. CLV 90 days

If this is the case, the displayed CLV value is a subset, namely the CLV generated within the first 90 days after a customer has placed his first order (including the CLV from the first order itself).


At times, this metric will only be displayed for a subset of customers - eg. CLV Repeat Customers

If this is the case, only the Contribution Margin 2 from customers that fullfil the requirements are used and calculate by the respective count of unique customers.

Used in the following reports

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