The Customer Life Time Value Postulate:
- What is one customer’s value to a business, and what should a business be ready to pay to earn the said customer?
- It all boils down to a postulation called “Customer Life Time Value” (CLTV), which is used to narrate the estimated value of one customer, to a business.
- It is essentially the average amount of money made over the lifespan of an average customer, discounted by future Cash Flows.
- The higher the value, the higher the Marketing Budget can be to acquire each customer.
- This is not only a crucial concept to understand in business, but also for investors that are looking to put money in Consumer Oriented Companies.
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