Customer Lifetime Value (CLV): All You Need to Know

Customer lifetime value is an important measure. All modern companies should know what it is and how to use it to their advantage.

About Customer Lifetime Value (CLV)

This is a measure of how much you’re getting from every single customer. That can help you figure out which customers are benefitting your business and which are not as important.

Why is customer lifetime value important to your business?

Customer lifetime value is the value of the relationship between you and a given client. In general, it is easier to please your existing customers than get new ones. You should know how much the relationship is generating for your bottom line. This is an ideal way to know what is going on in your business with each client right now.

How Do You Calculate Customer Lifetime Value?

The process of making this calculation can be difficult. However, there are typically four factors that go into it. This includes the Average Order Value, the Purchase Frequency as well as the Gross Margin, and the Churn Rate.

How to Improve Your Customer Lifetime Value (LTV)

Providing help in the form of personalized recommendations can help your customer LTV. Other ways of making it work in your favor include a personalized newsletter and product bundle that can add even more discounts and encourage your customers to shop with you. According to the experts from AppsFlyer, there are countless reasons and ways to improve your LTV.

How to Use Customer Lifetime Value

Once you understand what it means to have an understanding of lifetime customer value, you can use it to better serve your clients and help them get what they want from your efforts. It can also be used to personalize your data streams and communicate with all of your clients.

CLV – Part of the Most Important Formula in Online Retail

It’s ultimately very simple. Any business owner should know how to ensure their customer acquisition cost always remains lower than their customer’s lifetime value. That way, they are not spending funds to acquire customers that will only cost them a profit in the end.

Why Don’t More Companies Use Customer Lifetime Value Effectively?

Many companies do not use this strategy in part because they lack access to data. As a company grows, it can be hard to extrapolate this data and make it work for you. New models make it possible to have access to such data and make sure the company is using it as effectively as possible.

Determine Your CLV With a Customer Data Platform

The right tools are essential. An effective data flow platform can serve as a central hub from which to measure varied data in any given quarter as well as overtime. The platform can ultimately consolidate all the data you need about each customer in one convenient place. That can help you focus efforts where they are likely to pay off.

These are the kinds of tools you’ll need to make your business more efficient. For more
information on the above, you can always reach out to places like AppsFlyer.