What is the measure described by Customer Lifetime Value (CLV) in simple terms?

• A. The contribution each customer will generate over their relationship with the business
• B. The total profit of a company
• C. The average order value
• D. The number of customers acquired per year

Answer: (A)

CLV is about the value a single customer creates over the entire relationship with the business. It focuses on the expected net contribution from that customer across all their purchases, considering how long they stay, how often they buy, how much they spend, and the costs tied to serving and acquiring them. In simple terms, it’s the future profits a customer is expected to generate for you, not just the immediate sale. This long-term, per-customer perspective is what makes the description in the correct choice the best fit. The other ideas describe different things: total company profit is an overall measure for the entire business, average order value looks at a single purchase size, and the number of customers acquired per year is an acquisition rate, not lifetime value.