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What is Customer Lifetime Value?
Customer lifetime value (CLV), sometimes written as LTV, is the total revenue a company can expect to earn from a customer account over the entire duration of the relationship.
Why CLV Matters
CLV provides the economic foundation for answering questions like: How much should we spend to acquire this type of customer? Which segments are worth investing in post-sale?
Key Drivers of Customer Lifetime Value
- Average contract value (ACV) at initial close
- Net revenue retention rate (expansion minus churn)
- Average customer lifespan or retention duration
- Upsell and cross-sell conversion rates
- Time to value and onboarding success rates
How MaxIQ Helps
MaxIQ helps revenue teams understand and improve the drivers of CLV by giving them visibility into account health, renewal risk, and expansion signals across the customer lifecycle.
Example
Two customers signed at the same ACV. One renews at 120% every year for five years due to expansion. The other churns after year two. Their CLVs are dramatically different despite identical starting points.
Related Terms
- Net Revenue Retention (NRR)
- Churn Prediction
- Account Health
- Expansion Revenue
- Customer Acquisition Cost (CAC)
