Definition

Client Lifetime Value (CLV)

The total revenue an agency can expect from a client relationship over its entire duration.

The total revenue an agency can expect from a client relationship over its entire duration.

Definition

Client Lifetime Value calculates the total worth of a client relationship from start to finish. It combines average contract value, relationship duration, and any additional revenue from upsells or referrals. CLV helps agencies understand which clients to prioritize and how much to invest in acquisition.

Why This Matters for Agencies

Understanding CLV changes how agencies approach client relationships. If a client's CLV is $50,000, investing $500 in retention efforts is clearly worthwhile. Agencies should track CLV by client type, industry, and acquisition source to optimize their business development.

Formula

(Average Monthly Value × Average Relationship Length) + Additional Revenue
Average Monthly Value:Typical monthly contract value
Average Relationship Length:Typical duration in months
Additional Revenue:Upsells, project work, referral value

Example

Monthly retainer: $5,000. Average relationship: 24 months. Upsells: $10,000 over lifetime. CLV = ($5,000 × 24) + $10,000 = $130,000

Maximize Every Client Relationship

Angelwood helps extend client relationships and identify expansion opportunities, directly increasing lifetime value.