Measuring and Growing Customer Lifetime Value

Measuring and Growing Customer Lifetime Value - Chapter 3.5...

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Chapter 3.5 Customer lifetime value (CLV) is a way of measuring how much your customers are worth to your business over the time they buy your products and services. A well-run CLV program can help you identify which customers are worth your greatest attention – and can help you make the most of your marketing dollars. What You Need to Know How does CLV differ from customer loyalty programs? Customer loyalty programs are designed to retain as many customers as possible, regardless of how much they buy from you. The CLV calculation indicates how much individual customers contribute to your profitability. What’s so important about lapsed customers? If they can be “revived,” they tend to behave like new customers and become regular buyers once again, with good potential lifetime value. What’s more important: customer retention or customer acquisition? While acquisition of new customers should never be neglected, existing customers make a comparatively greater contribution when marketing costs are taken into consideration. Do we want to retain all our customers? Not necessarily; some customers may not be profitable. Using CLV, you can calculate the cost and contribution of each customer. What to Do Understand the Benefits of Knowing CLV Customer lifetime value is a way of measuring how much your customers are worth to you, over the length of time that they remain your customers. Customer “lifetime” will vary from industry to industry, and from brand to brand. There are significant potential benefits in using CLV:
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Measuring and Growing Customer Lifetime Value - Chapter 3.5...

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