Customer Lifetime Value (CLV) is the dollar value of a customer relationship based on the present value of the projected future cash flows from the customer. Focusing on CLV shifts the focus from quarterly to the long-term health of customer relationships. CLV = margin ($) *(retention rate (%) / [1 + discount rate (%) - retention rate (%)]). The components of CLV work together to create the best customers for your business. Retention rate, discount rate, and margins are good metrics to track.
Customer value, projecting future cash flows, relationships rule