Customer Lifetime Value (CLV)

What is ‘Customer Lifetime Value’?

Customer lifetime value, often abbreviated to CLV, is the measure of a customer’s value to a business. In gaming, it refers to how valuable any one player is to the business overall. A player who spends a lot of time and money with the business is more valuable than one who plays small amounts infrequently, but the cost of keeping a regular customer happy and retained is often higher, so the value of each player varies. Understanding CLV rates can help a casino business develop their games and it can assist players in being correctly categorized and assigned the right levels of service and access.

‘Customer Lifetime Value’ Explained

Customer lifetime Value is a common metric used in marketing. It provides companies with a cash value for their customers, and helps them establish long term relationships with profitable customers while reducing the costs associated with less profitable service users. In casino gaming, CLV is important when assessing features like game access, payout rates and VIP services. Many casinos have tiered membership levels that receive different levels of spending based on each tier’s average CLV, and this allows them to offer gifts and bonuses which help to retain customers and bring in new ones.

The CLV of any customer is variable, so the model is simply a predictive metric. However, there is plenty of accuracy in the system, which means it is a valuable tool for casino owners to use. Determining a customer’s CLV depends on many factors, including length of time as a customer, typical spending on a monthly and annual basis, and demand placed upon higher level services. Casinos hope to retain their players for a long time and have them play all of their games in one place, so knowing the CLV of their players is crucial to long term business planning.

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