Customer Lifetime Value (CLV) is one of the key metrics in modern marketing and customer success management. This key figure quantifies the total value that a customer generates for a company over the entire duration of their relationship with the company. CLV indicates how much revenue a customer is likely to generate over time and is therefore an important tool for resource allocation and strategic planning.

CLV is usually calculated using a formula that takes into account both the customer's current and future spending, minus the cost of acquiring and retaining that customer. There are various methods of calculating CLV, but it often includes factors such as average revenue per transaction, frequency of transactions and the average lifespan of the customer relationship. These figures are then set in relation to the costs of customer acquisition and retention to determine the net CLV.

In a competitive environment, CLV is crucial to a company's profitability. A high CLV enables a company to invest more in customer acquisition and maintenance while remaining profitable. In addition, CLV helps to segment the customer base, allowing marketing strategies to be designed more efficiently. By focussing on customers with a high CLV, companies can make optimal use of their resources and increase customer loyalty at the same time.

CLV is not just a financially orientated metric; it also provides insight into the quality of the customer relationship. A falling CLV can be an early indicator of problems in customer service or product quality, while a rising CLV often shows that investments in customer loyalty and service are bearing fruit. Therefore, CLV is a holistic metric that takes into account both financial and customer-related aspects of a company.