Customer Lifetime Value (CLTV) is a metric that estimates the total revenue a business can expect to generate from a single customer throughout their relationship with the company. It helps businesses understand the long-term value of acquiring and retaining customers, rather than just focusing on the immediate sales or profits from individual transactions.

CLTV is important because it enables companies to:

1. Determine marketing spend: Understanding CLTV helps businesses decide how much to invest in acquiring new customers or retaining existing ones.
2. Improve customer retention: By knowing the potential long-term value of customers, companies can tailor their efforts to increase customer loyalty and satisfaction.
3. Segment customers: Businesses can identify high-value customers and design specific strategies to target them.

To calculate CLTV, the following formula is often used:

\[
CLTV = \text{Average Value of a Purchase} \times \text{Purchase Frequency} \times \text{Customer Lifespan}
\]

Where:
- Average Value of a Purchase is the average amount a customer spends per transaction.
- Purchase Frequency is how often a customer buys from the business within a given period.
- Customer Lifespan is the average duration a customer continues to make purchases from the business.

By analyzing CLTV, businesses can gain insights into how to optimize their strategies for acquisition, retention, and customer experience.