Customer Lifetime Value: What’s a Customer Worth?

How much is a customer worth, and how should a customer's value guide marketing decisions? This case introduces customer lifetime value (CLV) as a framework for deciding how much to spend on attracting and keeping customers. Students learn to calculate CLV, examine how margins and retention affect customer value, and compare that value with acquisition costs. The case also explores why differences across customer segments matter and how to estimate value in businesses without subscriptions. An additional example in the appendix shows how purchase histories can inform these estimates.