Customer lifetime value is the discounted net cash flows from the customer for all of the years that it remains a customer compared to the initial acquisition cost to obtain the lifetime relationship with the customer.

Question

Quizplus · Accepted Answer

This is a correct definition of customer lifetime value. It takes into account the net cash flows generated by the customer over time, discounted to reflect the time value of money, and compares it to the cost of acquiring the customer. This calculation helps businesses understand the long-term value of their customers and make decisions about how much to invest in acquiring and retaining them.

Customer Lifetime Value Is the Discounted Net Cash Flows from the Customer