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Customer lifetime value is the total revenue you expect from a customer across the whole relationship, not just the first sale. A simple estimate: average sale value × number of purchases per year × average number of years a customer stays. Why it matters: it changes what you can afford to spend to win a customer. If a customer is worth [Amount] once, your acquisition budget is small. If they stay for three years, you can invest considerably more in winning them — and considerably more in keeping them. It also reframes retention. Extending average customer life from two years to three increases the value of every customer by 50%, without winning a single new one. Estimate it roughly rather than precisely. A rough number that changes decisions beats an exact one you never calculate.
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