CLV puts a value on the customer relationship; thus, it is a key component in the CRM system. Knowing the customer's value helps an organization determine which customers they want to strengthen their relationship with and which ones they don't. Read this article to explore the concept of customer lifetime value and why an organization needs to utilize it in its decision-making. Focus on the methodology for calculating CLV and think about the variability inherent in each step of the calculation.
A Customer Life Time Value is the output of a model, not an input. If you change the model inputs (e.g., let's say marketing is effective and you increase your retention rates), your average CLV will increase.