So far we have mentioned how important it is to keep the customers, to work on their loyalty and to keep them actively buying. In the end, this leads to a lifetime value of the customer.
The customer lifetime value CLTV is calculated on the basis of the total level of sales (and payments) a customer did in a certain time slot, minus the marketing costs made in order to get the customer to buy from you.
It is also used to predict how much more profit a customer can deliver to a company. Depending on the level of sophistication this can be very complex. A very common practice to keep it simple and workable is to assume that the COGS (Costs of Goods Sold) will stay as is, as will the marketing costs and effectiveness.