---
title: "What Is Customer Lifetime Value (CLV)? Definition"
description: "Customer lifetime value (CLV or LTV) is the total value a customer brings over their relationship with a company. Learn how CLV is calculated and used."
canonical: https://www.onegtmlab.dev/glossary/customer-lifetime-value
---

# What Is Customer Lifetime Value (CLV)? Definition

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GTM Glossary

# Customer Lifetime Value (CLV)

Customer lifetime value (CLV or LTV) is an estimate of the total revenue or gross profit a company expects to earn from a customer over the whole relationship.

Also called: CLV, LTV, lifetime value

## Why it matters

Lifetime value tells a company how much a customer is worth, which sets how much it can sensibly spend to win one. It is often compared with customer acquisition cost: if winning a customer costs more than that customer is likely to bring in, growth loses money. CLV also helps compare segments and channels by the value of the customers they produce.

A simple version for subscription businesses multiplies average revenue per customer per period by the average number of periods a customer stays, which can be estimated from churn. Using gross margin instead of revenue gives a more conservative figure. Because it is a forecast, CLV is only as reliable as the retention and revenue assumptions behind it.

## Example

A company's average customer pays $1,000 a month and the business keeps about 80 percent of that as gross margin. Monthly churn is 2 percent, which implies an average lifetime of about 50 months. Lifetime value on a gross margin basis is roughly $800 times 50, or $40,000 per customer.

## Related terms

-   [Customer Acquisition Cost (CAC)](/glossary/customer-acquisition-cost)
-   [Churn Rate](/glossary/churn-rate)
-   [Monthly Recurring Revenue (MRR)](/glossary/monthly-recurring-revenue)
-   [Net Revenue Retention (NRR)](/glossary/net-revenue-retention)
-   [Average Contract Value (ACV)](/glossary/average-contract-value)

## Related service

[RevOps Clean CRM data, lead routing and reporting your team can trust.](/services/revops)

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