What is Customer lifetime value?
The total revenue you can reasonably expect from one customer over the whole relationship, used to decide what you can afford to spend winning them.
What is Customer lifetime value (CLV)?
Customer lifetime value, CLV or LTV, is the total profit or revenue a typical customer generates before they leave. The simplest version multiplies average purchase value by purchases per year by average years as a customer. A salon client who spends 15,000 naira per visit, visits eight times a year and stays three years is worth roughly 360,000 naira, not 15,000.
CLV changes how every other number reads. An acquisition cost of 20,000 naira looks expensive against a single 15,000 naira visit and cheap against 360,000 naira of lifetime value. It also tells you which customers to protect: losing a high-CLV customer costs far more than their last invoice.
Why it matters
CLV is the ceiling on what you can spend to acquire and retain a customer, so it silently governs your marketing budget, your discount limits and how much service a complaint deserves. Businesses that know their CLV can outbid competitors for attention and still profit; businesses that do not, guess.
How it works in Medivot
Because Medivot keeps purchases, bookings, campaigns and support history on one customer record, you can segment customers by total value and behaviour and treat the segments differently: win-back automations for lapsing high-value customers, thank-you campaigns for your best accounts, and reports that show which channels bring customers who stay.
Frequently asked questions
How do I calculate customer lifetime value?
A practical start: multiply your average order value by how often a typical customer buys per year, then by how many years they typically stay. Use profit instead of revenue if you know your margins. Even a rough figure beats none, because it sets a rational limit on acquisition spend.
What is a good CLV to CAC ratio?
A common rule of thumb is that lifetime value should be at least three times customer acquisition cost. Below that, growth eats cash; far above it, you are probably under-investing in winning customers you could afford to chase harder.
Guides and resources
- Best CRM Software in Nigeria: Manage Leads, Clients & Sales for Nigerian Businesses
- Marketing Automation in Nigeria: Save Time, Nurture Leads & Scale Your Nigerian Business
- All glossary terms
- Pricing