blog, brand building

Customer Lifetime Value: the Metric You Can't Afford to Ignore

August 1, 2025

When it comes to loyalty, it’s not just about how many customers walk through your door, t’s about how long they stay, how often they return, and how much joy your brand brings them every time they do.

That’s where Customer Lifetime Value (CLV) comes in. If you’re in the business of building lasting connections, CLV isn’t just a metric, it’s your compass.

So, what exactly is Customer Lifetime Value (CLV)?

Think of CLV as the heartbeat of your customer relationships. It’s a prediction of the total value a customer will bring to your brand over the course of your relationship. It goes beyond simple metrics like conversion rate or average order value by capturing the long-term financial impact of each customer.

When you understand CLV, you begin to think differently: which customers are worth investing in? Where should marketing dollars go? What kind of experiences keep people coming back?

Daniel McCarthy, a leading voice in predictive customer analytics, emphasises that CLV isn’t a fixed figure but a forecast. It’s influenced by customer behaviour, product relevance, and brand engagement. This makes it a living, evolving metric that adapts as your relationships grow.

In a world where loyalty is fragile and attention spans are short, CLV helps brands make smarter decisions based on future value, not just past purchases. It’s not about predicting the future with absolute certainty, but about setting direction with informed, data-backed assumptions.

CLV gives you the long view, because when loyalty is your goal, one transaction is never enough.

How do you calculate CLV?

Good news: You don’t need a PhD or AI to calculate it. You just need the right formula for your business type.

CLV is calculated by estimating the revenue a customer generates throughout their lifecycle and subtracting the costs associated with serving and acquiring that customer. The goal? To determine how much each customer is worth to your business. Not just today, but over time.

If you’re a subscription-based brand, it looks like this:

ARPU stands for Average Revenue Per User. It’s the total revenue you earn from customers each month, divided by the number of active users.

Let’s say your ARPU is €40, your margin is 70%, and churn is 4%: CLV = (€40 x 0.70) / 0.04 = €700

Simple, powerful, and actionable. For transactional models (think retail, FMCG, hospitality):

Plug in your own data, and voilà! You have a powerful lens on long-term value. Just don’t forget to segment your customers and refresh your inputs regularly. CLV isn’t a set-it-and-forget-it number; it evolves with your customer relationships.

Why should marketers care? (Spoiler: It’s your secret growth engine)

Customer Lifetime Value is the North Star for brands. Why? Because when you understand the true value of a loyal customer, everything changes:

You acquire smarter: Knowing CLV helps you set acquisition budgets with confidence. Spend €30 to acquire a customer worth €300? Yes, please.
You retain better: The longer your customer stays, the more valuable they become. Loyalty isn’t a nice-to-have; it’s your profit center.
You prioritise the right customers: Not all customers are created equal. CLV helps you identify who deserves that surprise-and-delight moment (hint: they all do, but in different ways).
You speak your CFO’s language: Loyalty becomes less fluffy and more financial. When you can show that a loyalty program lifts CLV by 20%, you win buy-in and budgets.

As we like to say at Stampix, when you lead with emotion, the numbers follow. And CLV is the ultimate emotional return-on-investment metric.

Benchmarks & real-world proof: How CLV shows up across industries

According to Harvard Business Review, acquiring a new customer can cost five to 25 times more than retaining an existing one. Meanwhile, research by Bain & Company shows that increasing customer retention rates by just 5% can increase profits by 25% to 95%. These insights demonstrate why CLV is so crucial. It shifts your focus from short-term transactions to long-term relationships.

Let’s talk numbers and look across industries:

Retail & E-commerce: Average CLV ranges from €150 to €300. Top performers like Sephora and ASOS use loyalty programs and personalised rewards to exceed this range. With the right emotional connection, CLV can even surpass €500 for high-frequency shoppers.
Subscription businesses: Think Netflix or HelloFresh. Average CLV starts at €1,000 and climbs quickly with strong retention strategies. For example, a €40/month subscriber with a 2-year lifespan and 70% margin has a CLV of around €672. Brands like Spotify and Peloton actively use this metric to guide loyalty investments.
Telecom & Utilities: With monthly plans and low churn, average CLV can range from €2,000 to €5,000. Vodafone, for instance, estimates long-term customer value based on ARPU and retention. Brands like EE and Orange use upgrades, rewards, and emotional engagement to reduce churn and push CLV higher.
Hospitality & Travel: Loyal travellers are worth tens of thousands. Marriott Bonvoy and British Airways use tiered loyalty programs to nurture frequent flyers and hotel guests with average CLVs starting at €7,500. Premium segments easily go above €15,000 thanks to repeat bookings and cross-brand spend.

The takeaway? Loyalty pays off… literally. And when paired with meaningful experiences (not just discounts), CLV becomes your ultimate brand-building metric.

Bringing it all together: CLV is your loyalty north star

Customer Lifetime Value isn’t just a marketing formula. It’s a reflection of how well your brand builds long-term relationships. It brings clarity to who your most valuable customers are, how they behave, and why they stay.

Whether you’re in retail, telecom, subscriptions, or travel, CLV can help you shift from short-term wins to long-term loyalty. It encourages smarter decisions, deeper engagement, and a focus on what matters most: creating meaningful, lasting connections with your customers.

The brands that understand and act on CLV are the ones that win not just loyalty,but long-term growth.