02 Customer Lifetime Value

Topics: Customer, Good, Customer service Pages: 30 (731 words) Published: February 1, 2015
1
 

Stars:
 that’s
 what
 we
 want
 
Lost:
 let
 them
 go
 

 
Knowing
 CLV
 helps
 you
 iden;fy
 V
 and
 FR
 (along
 with
 sa;sfac;on
 measures)
 

 
FR:
 need
 to
 increase
 profit;
 charge
 more
 or
 serve
 less
 (cost)
 
V:
 could
 be
 stolen;
 take
 resources
 from
 FR
 to
 use
 on
 V
 to
 reduce
 their
 vulnerability
 

2
 

CLV
 =
 NPV
 for
 customers
 
CLV
 focus
 on
 profit,
 so
 it
 doesn’t
 have
 market
 share’s
 revenue
 weakness
 
CLV
 is
 calculate
 over
 the
 long-­‐term
 and
 acknowledges
 that
 customers
 might
 defect
 
This
 is
 also
 called
 LTV
 =
 Life0me
 value
 

3
 

Amazon
 –
 Jeff
 Bezos….$33
 value
 of
 the
 customer
 vs.
 $100
 for
 other
 Dot-­‐com
 start-­‐
ups
 on
 average
 (most
 of
 whom
 went
 out
 of
 business).
 
If
 you
 can
 get
 a
 shopper
 at
 $33…our
 marke;ng
 budget
 is
 unlimited.
 

 
CLV
 and
 PPC
 (giZ
 baskets)
 

4
 

If
 a
 churn
 rate
 is
 known,
 r
 =
 1
 –
 churn
 rate
 
r
 represents
 the
 cumula;ve
 reten;on
 (reten;on
 rates
 may
 vary
 from
 period
 to
 
period)
 

 
Ignore
 this
 line:
 {
 CLV
 }_{
 N
 }=\sum
 _{
 t=1
 }^{
 N
 }{
 \frac
 {
 {
 m
 }_{
 t
 }{
 r
 }^{
 (t-­‐1)
 }
 }
{
 {
 (1+i)
 }^{
 (t-­‐1)
 }
 }
 -­‐AC
 }
 
 

5
 

The
 stuff
 in
 the
 parentheses
 in
 the
 numerator
 is
 called
 the
 “margin
 mul;ple”
 

 
Ignore
 this
 line:
 {
 CLV
 }_{
 \inZy
 
 }=\frac
 {
 m*(1+i)
 }{
 (1-­‐r+i)
 }
 -­‐AC
 

6
 

r
 represents
 the
 cumula;ve
 reten;on
 at
 the
 period.
 

 
Ignore
 these
 lines
 below:
 
A1:
 
A2:
 {
 CLV
 }_{
 \inZy
 
 }=\frac
 {
 m*r*(1+i)
 }{
 (1-­‐r+i)
 }
 -­‐AC
 
B1:
 
B2:
 
C1:
 {
 CLV
 }_{
 N
 }=\sum
 _{
 t=1
 }^{
 N
 }{
 \frac
 {
 {
 m
 }_{
 t
 }{
 r
 }^{
 (t-­‐1)
 }
 }{
 {
 (1+i)
 }^{
 (t-­‐1)
 }
 }
 -­‐
AC
 }
 
C2:
 
D1:
 
D2
 

7
 

m
 =
 ($50
 -­‐
 $20)
 *
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Customer Value Marketing Essay
  • Customer Value:  Transform Your Business & Increase Profits  Essay
  • The Customer Revenge Case Study Essay
  • Essay about Marketing and Customer Base
  • Data Mining in Customer Acquisition Essay
  • Essay about Customer Lifetime Value
  • Customer Lifetime Value
  • Customer Lifetime Value Model Essay

Become a StudyMode Member

Sign Up - It's Free