# Customer Lifetime Value (CLV)
Confidence: high
Last verified: 2026-05-22
Generation: human_only


## TL;DR

Customer Lifetime Value (CLV) is the total revenue a business can expect from a single customer account throughout the business relationship. It drives decisions about acquisition cost, retention strategies, and customer segmentation. CLV = Average Purchase Value × Purchase Frequency × Customer Lifespan.

## Core Explanation

CLV > CAC (Customer Acquisition Cost) is the fundamental unit economics test. CAC = marketing spend / new customers acquired. Payback period: months to recoup CAC from customer profits. Segmentation: top 20% of customers often generate 80% of profit (Pareto principle). Retention > Acquisition: increasing retention by 5% can increase profits by 25-95% (Bain & Company research).

## Further Reading

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