How retailers best work with Customer Lifetime Value

In today’s retail landscape, winning a customer once isn’t enough. Building long-term value is what separates thriving brands from the rest. According to a McKinsey study, adding experience-led strategies increases the wallet-share by 5-10%.

The key to unlocking this potential? Understanding—and acting on—Customer Lifetime Value (CLV).

What is customer lifetime value?

Customer Lifetime Value (CLV) is a forward-looking metric that estimates how much revenue a single customer is expected to generate for your business throughout the remainder of their relationship with your brand. In retail, it’s a powerful way to predict long-term profitability and shape strategies around acquisition, retention, and loyalty.

Rather than just tracking past behavior, CLV helps you prioritize future growth by focusing your efforts where they’ll make the biggest impact.

Customer lifetime value (CLV) is a predictive metric that indicates the total revenue your business can expect from a single customer over the remaining duration of your relationship. This is an important element in CRM marketing often used to identify segments that are the most or least valuable to you.

How CLV is calculated in Voyado

Voyado estimates Customer Lifetime Value (CLV) by projecting how long a customer will remain active and the revenue they’re likely to generate during that time. This estimated income is then adjusted for a fixed profit margin and capital cost, offering a realistic view of the customer’s future profit potential.

This metric becomes especially valuable when tied into your loyalty strategy or CRM efforts, helping you segment smarter, automate more effectively, and allocate your marketing budget more strategically.

How to use CLV in retail marketing

1. Prioritize the right customers

CLV isn’t just a number—it’s a decision-making tool. A historically loyal customer might be slowing down, while a new shopper with high engagement signals could have greater potential. CLV helps you focus on who’s worth nurturing today to maximize value tomorrow.

2. Build a CLV-based segmentation model

Start simple. Create a tiered segmentation structure aligned with your loyalty strategy. For example:

This segmentation can serve as the foundation for triggered journeys, personalized campaigns, and even reward structures in your loyalty program.

3. Automate customer journeys by value

Use your CLV segments to tailor automation flows:

• Gold members might get exclusive pre-sale access or VIP experiences.
• Silver members could be nurtured toward higher-value behavior with personalized recommendations.
• Bronze customers can receive win-back or introductory offers designed to increase their engagement—and eventually their CLV.

This model can then be used to build triggered customer journeys. Here is an easy example of such automation:

Strategic tip: Combine CLV with behavioral insights

While CLV predicts future value, it’s even more powerful when layered with other customer data that can be found in Voyado:

• Purchase frequency
• Channel preference (online vs in-store)
• Product category interest
• Customer lifecycle stage

This holistic view allows you to fine-tune your messaging and deliver the right incentives at the right time.

Let’s sum it up

CLV is more than a metric—it’s a mindset shift. Instead of only reacting to what customers have done, you’re planning for what they could do. And in a competitive, cost-conscious market, that future-focused view could be your best bet for sustainable growth.

Ready to build a loyalty strategy around lifetime value? Start by segmenting smarter, automating with purpose, and focusing on what really drives revenue: relationships that last.