Everything You Need to Know About Customer Lifetime Value (CLV)
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Transcript of Everything You Need to Know About Customer Lifetime Value (CLV)
Who Uses Sweet Tooth?
More than 4,000 retailers in over 40
countries.
Over 20 million happy, loyal customers
created.
CLV is a way to know how valuable a
customer is going to be to you over
some period of time.
What is Customer Lifetime Value?
Why Use CLV?
Takes the guessing out of:
SEM/PPC Advertising
Customer Retention Spending
Discounting, Promotions
and more…
Simple & Inexpensive CLV
CLV = AOV * APY * Profit
Margin
AOV = Average Order Value
APY = Average Purchases per Year
Accurate & Inexpensive
Source: http://www.metricmogul.co.uk/tracking-customer-lifetime-value-in-google-analytics/
Accurate & Inexpensive
Resources:https://rjmetrics.com/product/metrics/customer-lifetime-value
http://customerlifetimevalue.co/
http://www.metricmogul.co.uk/tracking-customer-lifetime-value-in-google-analytics/
https://blog.kissmetrics.com/how-to-calculate-lifetime-value
http://www.windsorcircle.com/blog/understanding-customer-lifetime-value-clv-clv-calculator
http://www.clv-calculator.com/customer-lifetime-value-formulas/clv-formula/example-customer-
lifetime-calculation
/
http://www.slideshare.net/frippery/a-step-bystep-guide-to-calculating-customer-lifetime-value
Segment Your Customers
When you segment your customers you
can gain valuable insight into what
customers are the most profitable for you.
1. Acquisition Channel
2. Demographics
Acquisition Channel Segmentation
Segment CLV by customer acquisition
channel to determine how much to spend
on each channel
Demographic Segmentation
Segment CLV by demographics (e.g.
location) to determine what personas to
write content for.
Use CLV to Measure Improvement
Set benchmarks. Know if CLV is
improving!
If you are not tracking you won’t know if
you are improving.
Improve Your CLV
Improve your CLV by increasing:
1. Average Order Values
2. Purchase Frequency
3. Life Span
Improve Average Order Value
• Free shipping thresholds
• Cross selling
• Product bundles
• Points programs (additional point
thresholds)
Improve Purchase Frequency
• Add elements of gamification
• Email marketing (retention emails)
• Loyalty programs
Improve Customer Lifespan
• Provide amazing customer support
• Create an amazing customer
experience
Advanced CLV Applications
• Cohort analysis
– A/B testing
– Marketing campaigns
• Integration with internal support systems
• Different CLV model comparisons & averaging
– Polynomial regression
– Bayesian inference
– Pareto/NBD
• Automated retention efforts