Developing a customer lifetime value model

Customer lifetime value (“CLV”) is critical to sustaining a long-term dialogue and relationship with the audience driving your business.  CLV is used as a quantifiable metric, and defines how you measure the “value” of your customer base.  Are you currently segmenting your marketing resources into key performance indicators of acquisition, retention and cross-selling?

A solid CLV strategy can help your business in multiple ways.  It can help you directly increase the accountability of your marketing programs.  Tactics and resources can be properly allocated once the most influential programs that cut churn are discovered through voice-of-the-customer research.  Next, consider the critical problem that lack of retention has on generating revenue.  Analyze customer deflection for a specific time span and research if your value proposition speaks to the benefits that increase response rates and repeat buying.

Recognize the differences between the “awake” phase of the consumer buying cycle and the “awareness” phase.  Someone who is awake to your brand has given you the ability to share in their purchasing power.  This profile may need nurturing, and dropout rates segmented by tactic and messaging helps measure churn.  Understand your process of customer acquisition by recognizing the marketing influence that drives your “awareness” phase audience closest to the buying decision.  E-mail open clicks and landing page conversions can be simple measures to defining the difference between a dialogue that is current and a relationship that is over.



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