Customer Lifetime Value (CLV)

CLV is typically estimated from historical purchase frequency, average order value, and customer lifespan, though more sophisticated models incorporate behavioral signals to predict which customers are likely to become high-value over time, not just which have been high-value historically. CLV is the metric that justifies retention investment: acquiring a new customer costs money, but a customer who returns multiple times and spends more per visit generates disproportionately more value relative to that acquisition cost than a one-time buyer.