To do this, you need to know one of the key metrics of your business: the Customer Lifetime Value or benefit you get from each customer.
Through this calculation, you will be able to understand the life cycle of kenya phone number data your customers and invest your resources efficiently to maximize your benefits.
In the following points we will review the advantages of knowing the Customer Lifetime Value, how it is calculated and what strategies you can carry out to optimize it.
But first let's stop and analyze its definition.
1 What is Customer Lifetime Value?
2 How Customer Lifetime Value is calculated
2.1 1 Calculate the average value per purchase
2.2 2 Calculate the purchase frequency
2.3 3 Calculate the average value per customer
2.4 4 Calculate the average customer dwell time
2.5 5 Calculate Customer Lifetime Value
3 Decisions based on Customer Lifetime Value
3.1 Set your maximum acquisition cost
4 Identify the strategy that presents the highest profitability
5. Identify the most profitable customer segment
6 5 Strategies to optimize Customer Lifetime Value
6.1 1 Optimize your onboarding process
6.2 2 Work on your content strategy
6.3 3 Invest in customization
6.4 4 Invest in remarketing campaigns
6.5 5 Create loyalty programs
What is Customer Lifetime Value?
Customer Lifetime Value (CLV) represents the value you expect to obtain from each customer during the time they maintain their relationship with the company.
This data is calculated based on your customer history and allows you to make a future projection that helps you make better business decisions.
One of the most useful applications of CLV is the segmentation of customers according to the benefit they bring to the company.
This segmentation is related to the customer journey, the retention rate ( churn rate ) and the customer loyalty process.
We will review these concepts in the following sections.
To maximize your profits, you must invest more resources in the most profitable customers for your company, as well as in the actions that are most effective in increasing loyalty to your brand.
This study conducted by the consulting firm Bain & Company and Harvard Business School determined that “increasing your customer retention rate by 5% can lead to an increase in profits of between 25% and 95% . ”
But before analyzing the strategies that will help you increase the profitability of your business by optimizing your Customer Lifetime Value, we need to be able to calculate it.
