Customer lifetime value

Research output: Chapter in Book/Report/Conference proceedingEntry for encyclopedia/dictionary/reference book

Abstract

A customer's lifetime value (CLV) is an estimate of the present value of the future cash flows associated with a particular customer or group of customers. CLV is a forward-looking concept that takes a long term perspective on a supplier's relationship with a customer and is the same unit of measurement that creates customer equity. The aggregated CLV of a firm's entire customer base equals the firm's customer equity. To compute the CLV of a specific customer, a firm needs to estimate net profits generated by the customer, expected purchasing life, and acquisition costs.
Original languageEnglish
Title of host publicationWiley encyclopedia of management
Subtitle of host publicationVol. 9 : marketing
EditorsCary L Cooper
Place of PublicationChichester, UK
PublisherJohn Wiley & Sons
Volume9
ISBN (Print)9781118785317
DOIs
Publication statusPublished - 2014

Keywords

  • customer lifetime value
  • net profits
  • customer equity
  • churn rate
  • discount rate

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  • Cite this

    Groeger, L., & Buttle, F. (2014). Customer lifetime value. In C. L. Cooper (Ed.), Wiley encyclopedia of management: Vol. 9 : marketing (Vol. 9). Chichester, UK: John Wiley & Sons. https://doi.org/10.1002/9781118785317.weom090070