Customer Lifetime Value

Unhappy Families

Customers are like Tolstoy’s unhappy families, all different in their own way. To value a consumer business, you need to understand customer lifetime value (CLV), which is driven by acquisition, monetization, and retention.

Because these variables are dynamic and interactive — and there’s no average customer — calculating CLV is difficult, as Michael Mauboussin, Head of Research at Counterpoint Global, writes in a recent report. Mauboussin is the finance equivalent of Daniel Kahneman, who wrote Thinking Fast and Slow. His report…