What is Customer Lifetime Value (CLV)?

A simple way to estimate customer lifetime value is to multiply the average purchase amount by how many times a customer buys per year and by how many years they typically stay. For example, if a customer spends an average of $300 per visit, buys twice a year, and stays for five years, their estimated lifetime revenue is $3,000. Using gross profit instead of revenue gives a more conservative figure.

CLV matters because it changes how much a business can sensibly spend to win and keep a customer. A cleaning company or HVAC contractor with recurring maintenance customers may find that a lead worth one small job is actually worth many jobs over several years.

Automation can raise customer lifetime value by keeping customers engaged between purchases. Service reminders, maintenance plan renewals, review requests, and reactivation messages to past customers help turn one-time buyers into repeat customers.