What Is Customer Lifetime Value Essay - 1756 Words

What is Customer Lifetime Value? â€Å"CLV is a projection to estimate a customer s monetary worth to a business after factoring in the value of the relationship with a customer over time. CLV is an important metric for determining how much money a company wants to spend on acquiring new customers and how much repeat business a company can expect from certain consumers† (Rouse, 2016). CLV can be used to identify the most and least profitable customers of a company and is based on the accumulated cash flow received directly or indirectly from a customer. Three metrics are used to calculate CLV, purchase frequency (how often a customer buys), gross contribution margin (how much the customer buys), and marketing cost (which are the resources used to increase the value of existing customer relationships and to retain customers). Using these metrics to calculate CLV equips companies with the information they need in order to effectively direct their marketing activities. Companies can use CLV to design marketing s trategies tailored to the specific needs of individual customers or to customer groups. They can also use CLV to tell them how responsive customers are to various marketing communication channels, and help companies, â€Å"formulate other customer-level strategies, such as customer selection and purchase sequence analysis to target the right customers for acquisition† (Kumar, 2006). Clark (2010) in the article The 16 business benefits of Customer Lifetime Value, uses TheShow MoreRelatedWhat Is Customer Lifetime Value? Essay1833 Words   |  8 PagesDiscussion 1 †¢ What is Customer Lifetime Value? Customer Lifetime Value is a metric used in marketing that represents the total net profit a company will gain from any given customer (Rouse, 2016). A company can describe a profitable customer as â€Å"a person, household, or company whose revenues over time exceed, by an acceptable amount, the company costs of attracting, selling, and servicing that customer† (Berger Nasr, 1998). The customer’s revenue that is excess is considered to be the customer lifetimeRead MoreWhat Is Customer Lifetime Value?.. Many Companies Use Customer1284 Words   |  6 PagesWhat is Customer Lifetime Value? Many companies use Customer Lifetime Value (CLV) as a way of â€Å"segmenting [their] customer base† (Gallo, 2014, para 4). You may ask why a company would want to segment their customer base, and the reason is that this allows a company to better service them. CLV, in short, allows a company to determine how much profit they can generate from a customer over the lifespan of that customer (Gallo,2014). Different customers will generate different amounts of profit forRead MoreWhat Can You Increase The Lifetime Value Of Your Customers2773 Words   |  12 PagesZappos One of the easiest ways to increase the lifetime value of your customers is exceptionally great customer service. For example, Zappos will automatically upgrade your shipping to next day air every once in a while. And it also offers a 1-year return policy with little or no questions asked. By providing exceptionally great customer service, you will not only make happy customers, but you’ll have customers who will continue to come back. In the short run, this may end up costing your companyRead MoreNorthern Aero Data (Clv) Case Analysis Essay938 Words   |  4 PagesQuestion 1 1) The lifetime value of a typical customer in each segment when the discount rate is 15%. * Exhibit 1 shows that the customer lifetime value for each segment with a 15% discount rate. * The lifetime value of a typical customer in the platinum( top 20%) segment is worth $3496. * The lifetime value of a typical customer in the platinum( low 80%) segment is worth $2394. * The lifetime value of a typical customer in the gold ( top 20%) segment is worth $1415. Read MoreEssay about Customer Life Time Value Model for Syphone1163 Words   |  5 PagesQuestion 1 What is the lifetime value of a typical customer in each of the four segments, in current dollar values? Compare these figures to the â€Å"Gross margin† figures in the original spreadsheet. What can you learn from this comparison? Solution 1 Following are the lifetime value of a typical customer in each of the four segments, in current dollar values. Segments / Segment description Customer lifetime value Gross margins Large accounts $78,454 $63,000 Large accounts, rebate $70,769 $36Read More Case Study: Office Depot Essay884 Words   |  4 Pages(1) What marketing orientation or approach does Office Depot appear to be using now? How does Office Depot create value for its customers? Describe two things it could do it move it more toward implementing the marketing concept. After the situation has been addressed by Steve Haines, Office Depot appears to be using a societal marketing concept approach. A societal marketing approach is carried out by making good marketing decisions through considering consumers’ wants, the company’s requirementsRead MoreCase Study : Customer Strategy Enterprise929 Words   |  4 Pages Customer-Strategy Enterprise Harinder Singh Institution Customer-Strategy Enterprise Under what conditions should a customer strategy enterprise consider firing an unprofitable customer? Search the Web for a company that has successfully fired customers in the past. What policies are successful, and what policies are likely to create mistrust? The rule of thumb in customer relationship management is to get, keep, and grow a valuable customer base. It means that organizations should consistentlyRead MoreBbva Essay726 Words   |  3 Pages1. What is the role of offline and online advertising in acquiring checking account customers for the bank? Building brand awareness, gaining trust, and improving consideration among potential bank customers for opening new checking accounts is the role of offline and online advertising in acquiring checking account customers. Another role that offline and online advertising plays in acquiring checking account customers for the bank is by being a gateway for other lines of businesses withinRead MoreCustomer Lifetime Value and Return on Marketing1459 Words   |  6 PagesCase Study: Conroy’s Acura: Customer Lifetime Value and Return on Marketing Case Summary: Conroy’s Acura was founded in November 1986 by Ross Conroy, a veteran of the car industry who also owned a General Motors dealership to open in Toronto and one of the first in North America. Located in downtown Toronto, Conroy’s Acura sold both new and pre-owned vehicles, and its service department was dedicated to Acura Products. Conroy’s Acura was an independently owned dealership that held a franchiseRead MoreKansai Case Study1460 Words   |  6 Pagesteam have developed several initiatives to try and turn themselves into a customer-centric organization. These incentives include: * Zutto - Operating without contracts. The customer pays up front and receives some benefit at the end of the commitment period in an attempt to elicit behavior (such as paying for another period) * Welcome Calls – Personal contact with each new customer in an attempt to keep customers from switching carriers. * Brand Strategy – Sign movie stars to produce