Customer lifetime value (CLV) is the total gross profit a customer brings you over the whole period they keep ordering, or, in the simpler version, the total revenue. The working formula is average order value times orders per month times months retained, times your gross margin if you want profit rather than revenue.
Why it matters
CLV tells you how much you can afford to spend to win a customer and what it costs when one leaves. A ₹100 first-order discount looks expensive against one ₹350 order and cheap against a ₹4,000 lifetime. It also shows the real price of the channel the customer orders through, because commission comes off every order for the whole lifetime, while a flat per-order fee does not grow with the ticket. Customer lifetime value for restaurants walks through the calculation with your own numbers.
Example
A cloud kitchen customer orders 2.5 times a month at ₹350 and stays about 8 months, so 20 orders and ₹7,000 of revenue. At a 60 percent gross margin that is ₹4,200 of gross profit. If every order comes through a delivery app at 25 percent commission, ₹1,750 goes to the app and the lifetime is worth ₹2,450. On a direct channel at ₹10 per order the fee is ₹200 and the lifetime is worth ₹4,000. So a ₹150 welcome coupon that moves one customer from the app to direct ordering pays for itself within the first two orders, and retention work that adds two months to the average lifetime adds about ₹1,000 per customer.
Tezzu's live dashboard includes customer insights, the starting point for working out this number for your own customers.