How to use customer lifetime value (CLV) in marketing

Many experts say that one of the most important metrics a marketing manager or e-commerce owner should pay close attention to is customer lifetime value, or CLV. This metric simply tells you what you can expect from an average customer over the course of your business and transactional relationship, expressed mainly as money spent. In this article, I look at what CLV is and how to use it in marketing and advertising, especially for e-commerce projects.

What is customer lifetime value (CLV)?

Customer lifetime value (CLV) is the total amount a customer is expected to spend with your company, your online shop or on your products during an average business relationship. Why is it so important to know? Because it helps you decide how much money to invest in acquiring new customers and retaining existing ones.

CLV helps you understand and assess your current customer loyalty. If customers keep coming back to buy from you, it is usually a good sign that you are doing the right things in your business. What is more, the higher your CLV, the less you have to spend on acquiring new customers.

CLV makes more sense to measure for repeat-purchase products such as contact lenses or food supplements. People buy these products again and again at clear intervals, and keeping these customers is essential for you because they bring in regular revenue. Some things, such as a fitted kitchen, people buy quite rarely, so CLV will often equal just one or two purchases.

Investing in customer retention

More broadly, customer lifetime value measures the profit tied to a specific customer relationship, and it should guide how much you are willing to invest in keeping that relationship. This means that if you estimate one customer’s CLV at 8,000 CZK (about 330 EUR), you will certainly not spend more than that amount. It simply would not pay off for you.

If you understand your CLV well, it can help you shape your business strategy so that you keep loyal customers instead of constantly chasing and acquiring new ones. Of course, both new and existing customers play an important role in building a business in general, and you need to work with both groups.

How do you calculate CLV?

Fortunately, calculating customer lifetime value is fairly simple, although there can be some variations in the calculation.

The simplest way to calculate CLV is:

CLV = average purchase value x number of purchases per customer per year x average length of the customer relationship in years.

Applied to the food supplements mentioned above, it might look like this.

CLV is 33,600 CZK (about 1,400 EUR) = average value of 2,800 CZK (about 120 EUR) x 3 purchases per year x 4 years.

You can also segment CLV by types of people and orders. People who order weight-loss products and those who order muscle-building products can have a dramatically different value for you.

Understanding how to calculate customer lifetime value is essential for every online shop owner or marketing manager. Knowing how much you can expect from an existing customer can give you a clear, up-to-date picture of the health of your business, as well as a rough prediction of how it might develop.

For example, if you find that your customer lifetime value has fallen in two consecutive quarters, you could invest more in customer retention and customer service. You should track the quantitative side (CLV), the qualitative side (reviews) and the state of your competitors. Although it is not the only factor affecting customer lifetime value, customer satisfaction plays a key role. If there is a difference in service quality between the customer’s first purchase and their third, CLV is likely to fall.

What does CLV tell you?

CLV is shaped by many internal and external factors, but if you ignore what CLV is telling you, you can get into trouble more easily.

• CLV segmented by product type and category or by socio-demographic factors.
• Which types of products your highest-CLV customers want, so you can step up marketing activity for them.
• Which products are the most profitable and which are the least.
• How much you can spend to acquire a similar customer while keeping the acquisition profitable.
• The exact amount you can expect an average customer to spend over time.
• Which of your customer types are the most profitable.
• Based on CLV, you can work on better understanding your most loyal customers. What do they like? Why do they keep buying from you?
• Together, these kinds of decisions can significantly increase your company’s profitability.

As with every metric you track in business, knowing the number is not enough. You need to use CLV to shape your overall business strategy. If your customer CLV is growing, it may mean you should keep investing in product development or customer success teams. If your CLV is falling, it may suggest that your latest marketing strategy needs a restart. One of the main benefits of understanding CLV is that it can help you significantly reduce customer acquisition costs over time.

How to maximise CLV

With the chance of selling to an existing customer at 75% and the chance of selling to a new customer at 5 to 20%, it is crucial to invest your resources in selling more to existing customers. In most cases, it is much easier to sell to existing customers than to invest in acquiring new ones. However, be very careful not to rely only on your existing customers. This often triggers a decline or a crisis, even though in the short term it is incredibly simple and effective.

How can you increase the average order value?

• Create an attractive and transparent loyalty programme that encourages repeat purchases with rewards and discounts. Be transparent, use gamification and genuinely try to reward users rather than lure them in and trick them. A bad loyalty programme can do a lot of damage and break relationships.
• Use upselling to increase the average customer transaction value. Aim to raise the average order.
• Make it easy for customers to return goods they bought from you. If you make it difficult or expensive, you will significantly reduce the likelihood of them buying again.
• Make strategic exceptions for your most loyal customers. For example, if someone plans to cancel a subscription service you offer, give them the option to stay with a small discount.
• Feel free to meet your best customers in person and build relationships with them so you understand why they keep choosing your brand.
• Create a rewards programme that encourages repeat purchases with rewards that are achievable and desirable.
• Offer free gifts and perks to build brand loyalty.
• Run exclusive offers for existing customers only. Let them know you want them and value them.
• Stay in touch. Long-term customers want to know you have not forgotten them. Make it easy for them to contact you too.
• By using CLV to shape your business strategy, you will ultimately build a more profitable and successful company, because you will focus on acquiring and retaining long-term customers who become your tribe, as Seth Godin would say.

Euro amounts are approximate, converted at the Czech National Bank rate of 24.34 CZK per EUR on 29 October 2026.

Patrik Pilous

I am a marketing strategist and SEO consultant. I love the world of marketing, the internet and AI. I am at my best when planning business growth, setting and executing marketing strategy and optimising websites (SEO, GEO and, above all, sales).