Customer Lifetime Value (LTV)

What Is Lifetime Value Of A Customer?

Customer lifetime value is the total worth to a business of a customer over the whole period of
their relationship. It's an important metric as it costs less to keep existing customers than it does
to acquire new ones, so increasing the value of your existing customers is a great way to drive
growth.

It is the total predictable revenue your business can make from a customer during their lifetime
as a paying customer. For instance, if a customer subscribes to one of your products under a one-
year plan, at that time, the lifetime of that customer is one year long.

What Is High Customer Lifetime Value?

It means customers love your brand and products.

A high customer lifetime value indicates people shop a lot from you. They seem to be satisfied
with the service and quality so your products must be good. And most importantly, they are
brand loyal so you have a chance for growing even more.

A higher CLV means that you have more loyal customers.

What Is The Lifetime Value Of A Starbucks Customer?

Starbucks calculated that the average lifetime value of their customer is $14,099. Knowing this
number for your company can drastically change how you look at your marketing. Starbucks
marketers know that they aren't selling a $5 cup of coffee; they are acquiring a $14k customer.

How Does Starbucks Increase Customer Lifetime Value?

Profit Margin per Customer.

Starbucks: 21.3%. One of the most effective ways to boost LTV is to increase customer
satisfaction. Research has found that a 5% increase in customer retention can increase profits by
25% to 95%.

What Are The Three Parts Of Customer Lifetime Value?

To calculate customer lifetime value, you need to know:

 · The average purchase a customer makes

· The average rate in which a customer makes a purchase

· How long a customer typically remains loyal to your brand

Who Are High Profile Customers?

High-profile clients rely on you to ensure that all of their needs are met. They are typically
involved in large transactions, and expect your service to be in line with what they are spending.
You have to take yourself out of the equation. When dealing with high-profile clients, it is all
about their needs.