Tag Archives: CLV

Understanding the Customer Lifetime Value

Earlier today I came across this post on Performix Integrated Marketing in which they highlight a recent article that Michelle Eggers of SAS Institute wrote about the importance of implementing marketing metrics and Customer Lifetime Value in your business.

Here’s a brief summary of the article as described by Performix:

  1. Look at the processes your marketing department is using. Are they ahead or behind schedule on jobs? Efficient, or chaotic? Keep a grasp on the people part of the process to be able to increase productivity.
  2. Distinguish between measuring campaign performance (e.g.. how the cross-sell campaign did online in the last 3 months) and look at the OVERALL effectiveness of all marketing programs, direct and traditional or broadcast media. You need to have the data on how all are performing in order to develop the right media mix.
  3. Develop and focus on broader business metrics that are not specific to any marketing program, like: sales growth, market share, total sales and total profits, Are they aligned? How do they interact?
  4. Look at the customer: except for managing marketing processes, all of the above relate to the customer. Are they affecting the customer positively or negatively? Create customer metrics, for things like: products (owned) per customer, customer profitability, customer satisfaction, net-adds, and customer lifetime valiue.

Does your business fully understand CLV?