In e-commerce, customer lifetime value (CLV) is a measure of the profitability of a customer over the course of their relationship with a business. It is calculated by estimating the average amount of money that a customer will spend on a business's products or services over the course of their lifetime, and subtracting the cost of acquiring and servicing that customer.
There are several factors that can impact a customer's CLV in e-commerce, including the price of the products or services, the frequency of purchases, and the length of the customer's relationship with the business. Other factors that can impact CLV include customer loyalty, customer retention, and customer acquisition costs.
E-commerce businesses can use CLV as a key metric to help understand the profitability of their customers and to inform business decisions such as marketing strategy, pricing, and product development. By understanding the CLV of their customers, e-commerce businesses can optimize their marketing and sales efforts to attract and retain high-value customers, and can make informed decisions about how to allocate resources in order to maximize profits.