Customer Lifetime Value
Customer lifetime value (CLV) is one of the key stats to track as part of a customer experience program. CLV is a measurement of how valuable a customer is to your company, not just on a purchase-by-purchase basis but across the whole relationship. Customer lifetime value is the total worth to a business of a customer over the whole period of their relationship. It’s an important metric as it costs less to keep existing customers than it does to acquire new ones, so increasing the value of your existing customers is a great way to drive growth. Knowing the CLV helps businesses develop strategies to acquire new customers and retain existing ones while maintaining profit margins. CLV is distinct from the Net Promoter Score (NPS) that measures customer loyalty, and CSAT that measures customer satisfaction because it is tangibly linked to revenue rather than a somewhat intangible promise of loyalty and satisfaction. Ultimately, you don’t need to get bogged down in complex calculations – you just need to be mindful of the value that a customer provides over their lifetime relationship with you. By understanding the customer experience and measuring feedback at all key touchpoints, you can start to understand the key drivers of CLV. Customer experience is made up of every instance of connection between a customer and a brand, including store visits, contact center queries, purchases, product use and even their exposure to advertising and social media. Improving the experience is a business-wide endeavor that’s often addressed using a customer experience management program. This is a process of monitoring, listening and making changes that add up to a lasting improvement in how customers feel and their tendency to be loyal over the long-term. A loyalty program incentivizes repeat business by offering discounts or benefits in return. It might take the form of a loyalty card or app, or a points system that customers accrue when they make a purchase. With your customer experience management program up and running, you’ll already have some ideas about which customers are likely to have the best CLV. This could include free expedited shipping, top-tier benefits in your loyalty program, or access to exclusive or pre-release products and services.
The Customer Lifetime Value template consists of four slides, each with its own unique infographic. You can build a graph using the main six indicators on the abscissa and display the planned and actual indicators. The next slide will give you an opportunity to divide your clients into according to the CLV level – low, medium, high. This slide will be useful for marketers and commercial directors. The third slide allows you to highlight the main customer in each segment of your sales and give a short description of the profit that the customer has brought to the company. The last slide can be used by business coaches and university educators when preparing their courses on Customer Lifetime Value. If necessary, you can independently edit all the elements of this template.