WHAT WE DO / SOLUTIONS BY FUNCTION
Customer Management
Customer Lifetime Value
Customer Lifetime Value – the foundation of data-driven customer strategy
An ideal customer is one who is highly profitable and loyal. The best marketing strategy is to find such customers and keep them loyal. Customer Loyalty and Profitability are distinct behaviors. Some of your customers could be highly profitable, but not very loyal. On the other hand, there are customers who are just mildly profitable, who tend to stay with you for a long time. However, the vast majority of customers tend to exhibit a behavior between these two extremes. Marketers could alter the behavior of these customers through innovative data-driven marketing strategies.
Marketers use Customer Lifetime Value (LTV) as a single unified measure of profitability and loyalty of customers. More and more marketers use LTV as a basis for their marketing programs and strategic planning. LTV is nothing but the cumulative Net Present Value of the profits from a given customer (or a segment of customers) for a given number of years.
The following graphic describes the drivers of LTV.
While estimating the LTV of your customers, there are several factors you need to consider, including:
LatentView follows a sophisticated methodology for estimating customer LTV that combines business understanding, advanced statistics, data management, with a proven delivery expertise.
Customer Management
Customer Lifetime ValueCustomer Lifetime Value – the foundation of data-driven customer strategy
An ideal customer is one who is highly profitable and loyal. The best marketing strategy is to find such customers and keep them loyal. Customer Loyalty and Profitability are distinct behaviors. Some of your customers could be highly profitable, but not very loyal. On the other hand, there are customers who are just mildly profitable, who tend to stay with you for a long time. However, the vast majority of customers tend to exhibit a behavior between these two extremes. Marketers could alter the behavior of these customers through innovative data-driven marketing strategies.
Marketers use Customer Lifetime Value (LTV) as a single unified measure of profitability and loyalty of customers. More and more marketers use LTV as a basis for their marketing programs and strategic planning. LTV is nothing but the cumulative Net Present Value of the profits from a given customer (or a segment of customers) for a given number of years.
The following graphic describes the drivers of LTV.
While estimating the LTV of your customers, there are several factors you need to consider, including:
Revenue per customer: One of the key drivers for LTV is the spending rate, or revenue per customer.
Retention: Increase in retention rate reduces customer service costs, increases revenue per customer.
Additional Purchase: Existing Customer may make additional purchases that could increase their LTV.
Referrals: When your customers turn into advocates, they recommend their friends, co-workers or relatives to your company. Referrals typically tend to have higher retention rates and spending rates.
Costs: LTV computation should apportion costs to the customer. These costs include cost of services or products, plus the variable administrative costs, as well as the acquisition cost.
LatentView follows a sophisticated methodology for estimating customer LTV that combines business understanding, advanced statistics, data management, with a proven delivery expertise.
