Customer Lifetime Value As the economy becomes increasingly customer-centric, delivering a premium customer experience has become essential to retaining customers and increasing profits.


Y analyzing the different market segments and their customer lifetime value, companies can strategically target the best customers to control them, improve their services and attract other valuable customers.

What Is Customer Lifetime Value?

Customer lifetime value (CLV) estimates the sum of profits a company hopes to make throughout its relationship with a given customer.

Why Is Customer Lifetime Value Significant?

Expressive how much your customers can bring to your business helps control how much you can invest in attracting and retaining them.

In addition to CLV, if you calculate your customer acquisition cost, you have the basis for measuring the return on investment of acquiring these new customers.

Instead of basic yourself on generalities or preconceived ideas, particularly the Pareto principle or the famous principle of “acquiring new customers costs 5x more than retaining them”, carrying out your calculations will allow you to establish a precise framework for your operations.

Should point out that calculating the lifetime value of your customer base as a whole is misleading. Indeed, can classify very different customers in the same category while they do not have the same value for your company.

Client Segmentation And CLV Customer Lifetime Value

The area of segmentation is to find collections of customers with like needs, thereby increasing the efficiency of your business.

When it comes to buyer lifetime value, you can identify groups based on their budget and the length of your relationship, advertisement, and minimize pain points.

Segmentation Can Be According To Different Criteria.

How you segment your customer base depends on the nature of your business and the type of customers you interact with a segment. B2B companies can segment according to sectors of activity or turnover.

B2C companies, on the other hand, may look at demographics and psychographics or lifestyle and location.

What Are The Profits Of Segmentation?

By segmenting your customers into different collections, you can express the most profitable categories for you.

This strategy allows you to retain your existing customers and use this information to acquire new ones. Measure and improve your return on investment from a recent customer acquisition

Identifying segments with high customer lifetime value allows you to prioritize these groups, focus your marketing strategy on their needs, and invest more money in acquiring new customers.

Understand Key Decisions

And also specific category may have chosen your business for the same reasons among your existing customers.

This information, part of your marketing strategy, can effectively position your business.

Improve Your Holding Selling

In a similar market segment, your customers may have decided to no more extended calls on you for the same reasons. Identifying these reasons allows you to adapt your products and marketing strategy to focus on these pain points and increase your CLV.

Improve Your Customer Service And Help Client’s Faithfulness

By using CLV to identify your most respected customers, you can give them special attention. By strengthening your relationship with them, And also you are bound to the risk of losing your most loyal customers.

Prioritize Products To Improve

Not all businesses are looking for the same products or features. By being thoughtful of these different groups and focusing on the most important customers, you can use the data to develop new products and improve your offering.

How To Calculate The CLV Customer Lifetime Value?

Here are many ways to calculate customer lifetime value.

Since this calculation can be influenced by churn rate, discount rate, profit margins, retention costs, and other factors, it Can take more and more variables.

The best plan depends on the product or service you are sell. So do some research to determine which program is right for you.

The Simplest Way To Analyze Customer Lifetime Value Is The Following Formula:

CLV = (Regular order value) x (Number of sales) x (Usual relationship duration)

If this formula does not seem elaborate enough to you, then read this 55-page university study on customer lifetime value, which notably offers the recipe detailed below:

And this formula gives you pain. You can always analyze your customer groups using the other, much more straightforward procedure. While the latter does not take as many variables into account and therefore may lead to more approximate results, it will allow you to learn a lot about the needs of each group.

For more precise calculations, you will certainly have to inform yourself about the most appropriate formula for your company.

How To Improve The CLV Customer Lifetime Value?

In general, improving your customer lifetime value comes down to improving your customer experience. Here are some tips to improve both.

  • Post-sales communications, including follow-up emails or messages through a mobile app. Can help improve the customer experience and answer frequently asked questions.
  • Use customer service to improve the customer experience. A little interaction with a customer is an opportunity to increase the value of your business. Research shows the critical role customer facility plays in retaining customers and getting them to recommend your company. (Check out our customer service guide for best practices)
  • Take into account the comments submitted to you, especially those of your loyal customers, to improve your product and customer experience.
  • Personalize your content. Especially in e-commerce and social selling, And also personalization can make the customer experience more enjoyable.
  • Reward loyalty. Whether it’s priority access to specific products, exclusive information, events, or member discounts. Rewarding loyalty improves the customer experience.
  • Improve membership procedures and follow-up. Some product categories require an onboarding process. The actual running of this procedure is the key to ensuring that your customers get the most purchase. The more benefits they get, And also the higher their customer lifetime value is likely to be.
  • Encourage your customers to buy more. Avoid giving your customers the feeling that you’re just trying to get them to spend as much as possible. Upgrading will improve the financial side of the equation, not the lifespan.

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