Customer Lifetime Value (CLV) is an important performance indicator for retailers, offering insights into various stages of the sales cycle. It can reveal strengths in acquiring first-time customers while highlighting challenges in retention, or on the other hand, may indicate strong customer loyalty and repeat purchases. In this article, we’ll explore how to calculate CLV, the key insights it provides, and strategies for improving it through clienteling.
How to calculate customer lifetime value?
Each company has their own golden number they would like to achieve, but in order to see if their average customer spends multiple times a year and has a good average basket value, you need to define what that goal should be by calculating :
The average order value (AOV) x purchase frequency x lifespan
Estimated examples of CLV for Apparel Retailers:
Segment | Low-End CLV | High-End CLV |
Fast Fashion (e.g., Zara, H&M) | $240 (AOV $40 × 3 purchases/year × 2 years) | $1,920 (AOV $80 × 6 purchases/year × 4 years) |
Mid-Tier Apparel (e.g., Nike, Levi’s) | $640 (AOV $80 × 2 purchases/year × 4 years) | $3,600 (AOV $150 × 4 purchases/year × 6 years) |
Luxury Fashion (e.g., Gucci, Prada) | $2,500 (AOV $500 × 1 purchase/year × 5 years) | $30,000+ (AOV $1,500 × 2 purchases/year × 10 years) |
The fast fashion segment typically sees higher repeat purchases but lower brand loyalty, whereas the luxury segment tends to have stronger brand loyalty with fewer repeat sales over the same timeframe. While these figures are realistic yet hypothetical, they serve as a useful benchmark for assessing whether your CLV is strong or in need of improvement. But whether your company stands in one vertical or the other, it is important to notice the evolution of patterns in order to correct it.
How to improve customer lifetime value (CLV) with clienteling?
Using a powerful clienteling software like Salesfloor enables retailers to implement effective customer loyalty strategies while gaining real-time visibility into how in-store sales efforts and outreach campaigns are concretely being executed. With features such as in-store task management, customer profile creation, and automated client outreach, clienteling platforms offer a scalable framework to drive repeat purchases and increase customer retention. But most importantly, it helps companies assess the areas of improvement needed in the day to day implementation of those initiatives.
Retailers leveraging clienteling software have consistently seen stronger results, especially those who integrated tasking features into their outreach and engagement strategies. These brands reported significant gains in both brand loyalty and average order value (AOV), with some seeing up to a 50% increase after adopting a multichannel communication approach.
In a previous article, we explored the key features of a successful clienteling platform and why they matter.
Don’t hesitate to book a free 1-1 session with our in-house experts to discover how you can implement clienteling in your growth strategy.
