Which of the following best describes a lifetime customer value (LTV)?
A) LTV is the value placed upon a retailer by a consumer
B) LTV is a numerical value of how much a "best customer" shops
C) LTV is an assessment of how many valued customers shop with a retailer
D) LTV is what a customer contributes to a retailer's profits over her lifetime
E) LTV is what retailers use to rate the value of guaranteed merchandise

Question

Quizplus · Accepted Answer

Lifetime customer value (LTV) refers to the amount of revenue a customer is likely to generate for a retailer over the course of their lifetime. It takes into account factors like how often the customer shops, their average purchase amount, and how long they are likely to remain a customer. LTV is used by retailers to help them understand the long-term profitability of different customer segments and make strategic decisions about marketing, customer service, and pricing. Option A is incorrect because it refers to the value placed upon a retailer by a consumer rather than the other way around. Option B is incorrect because it only takes into account the shopping habits of a single customer rather than a group of valued customers. Option C is also incorrect because it only focuses on how many valued customers shop with a retailer rather than the amount of revenue they generate. Option E is unrelated to the concept of LTV.

Which of the Following Best Describes a Lifetime Customer Value