Which term describes the worth of a customer over their lifetime with an organization?

Which term describes the worth of a customer over their lifetime with an organization?

• A. Customer lifetime value
• B. Brand equity
• C. Brand awareness
• D. Intangible

Answer: (A)

Customer lifetime value is the forecasted total profit a business expects to earn from a single customer over the entire relationship. It combines how often a customer buys, how much they spend on average, and the costs to acquire and serve them, often factoring in the time value of money. This metric guides decisions about how much to invest in acquiring and retaining customers by weighing long-term value against marketing and service costs. Brand equity reflects the overall value of the brand itself, not the lifetime worth of individual customers; brand awareness measures how familiar people are with the brand; and intangible is a general term for non-physical assets, not a metric describing customer value.

Customer lifetime value is the forecasted total profit a business expects to earn from a single customer over the entire relationship. It combines how often a customer buys, how much they spend on average, and the costs to acquire and serve them, often factoring in the time value of money. This metric guides decisions about how much to invest in acquiring and retaining customers by weighing long-term value against marketing and service costs. Brand equity reflects the overall value of the brand itself, not the lifetime worth of individual customers; brand awareness measures how familiar people are with the brand; and intangible is a general term for non-physical assets, not a metric describing customer value.