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CRM 13-14

The document discusses Customer Lifetime Value (CLV), a metric that estimates the total net profit a company can expect from a customer over their relationship. It highlights the importance of CLV in guiding customer acquisition spending, understanding customer preferences, and identifying profitable relationships. Strategies for improving CLV include easy returns, loyalty programs, and effective communication with customers.

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Tushit Raj
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6 views8 pages

CRM 13-14

The document discusses Customer Lifetime Value (CLV), a metric that estimates the total net profit a company can expect from a customer over their relationship. It highlights the importance of CLV in guiding customer acquisition spending, understanding customer preferences, and identifying profitable relationships. Strategies for improving CLV include easy returns, loyalty programs, and effective communication with customers.

Uploaded by

Tushit Raj
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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CUSTOMER

RELATIONSHIP
MANAGEMENT
Dr. Monica Bhatia
2

Customer Lifetime Value


(CLV/CLTV)
 Metric that represents the total net profit a company
can expect to generate from a customer throughout
their entire relationship. It takes into account the
customer’s initial purchase, repeat purchases, and the
average duration of their relationship with the
company.

 Guides how much a business is willing to invest to


maintain that relationship.
3

Importance
 Shows how much can be spent to acquire new
customers and still have a profitable relationship.
 Kinds of products high-value customers want
 Which products have the highest profitability
 Which customer relationships are driving the bulk
of sales
 Who are most profitable types of clients
 Details about the customer journey and churn rates
4

Improving CLV
 Easy returns
 Make strategic exceptions for most loyal customers.
 Interview and connect with best customers to understand why they
continue to choose the brand.
 Set expectations regarding delivery dates, aiming to underpromise
and overdeliver.
 Create a loyalty program. Encourage repeat purchases with rewards
that are both attainable and desirable.
 Reward loyal customers.
 Run deals exclusive to existing customers.
 Use upsells to increase the average value of a customer transaction.
 Stay in touch. Long-time customers want to know you haven’t
forgotten them.
 Make it easy for customers to reach out to the company.
5

CLV Models
 Historical model: uses past data to calculate
customer value. It doesn’t consider whether the
existing customers will be customers in the future.
Suitable for businesses with a fixed lifespan for
customer relationships (e.g., one-time or short-term
purchases).

 Predictive model: forecasts future lifetime value by


considering the buying behaviors of new and
existing customers.
Ideal for subscription-based businesses or companies
with recurring purchases. Requires advanced analytics
and historical data.
6

CLV Calculation
CLV=customer value X average customer lifespan

*Customer Value = (Average Purchase Value x


Average Number of Purchases)

**Average purchase value = total value/no. of orders

**Average no. of purchases = no. of purchases/no. of


customers
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Risk Probability % Impact


Poor Planning & 50-70 High
Strategy
ack of Executive 40-60 High
Support
User Resistance 50-70 High
Data Quality Issues 40-60 High
Integration 30-50 Medium-High
Challenges
Over-Customization 30-5- Medium
Budget and Time 40-60 Medium-High
Overruns
Lack of Continuous 30-50 Medium
Monitoring
Security & 30-50 Medium
Compliance Risks
8

Thank you

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