Definition
The total revenue a single customer is expected to generate over the duration of the relationship. Higher CLV justifies higher acquisition spend and longer retention investment.
Why it matters
Thinking in terms of lifetime value rather than the first sale changes how an owner decides what a customer is worth pursuing and keeping. When repeat business is strong, it can make sense to spend more to win a customer and invest more in keeping them happy, because the return plays out over years rather than a single purchase. Owners who only look at the first transaction tend to underinvest in the relationships that quietly drive most of their revenue.