The core purpose of a CLV analysis is to identify your most valuable customers. Of course, the insights uncovered during a CLV project can also feed into other areas – including churn analysis, personalisation and targeting in marketing, customer acquisition and budget allocation.
Several factors can influence customer lifetime value – including demographics, brand loyalty and overall customer experience.
DemographicsThe demographic groups a customer fits into can impact their CLV. For example, a higher income bracket may correspond with a higher CLV, while younger customers may have a lower lifetime value in general. Understanding how demographic factors interact with CLV can help you target customer groups more precisely.
Customers who are very loyal to your business or brand are less likely to churn and tend to have a higher CLV. This means increasing loyalty, either through loyalty programmes, targeted communications or special offers, is a worthwhile goal.
Customer experience can have a real impact on CLV because elements like ease of ordering, positive experiences with staff and personalised communications can increase sales. Improving the customer experience at multiple touchpoints can be a way to increase CLV overall.
The business benefits of CLV analysis include a better understanding of customer value, insight into how your loyalty programme is working, a deeper knowledge of acquisition costs and more efficient marketing.
Improving your understanding of customer value is the core purpose of CLV analytics. This understanding can help you improve customer service and retention across your organisation, potentially boosting profitability over time.
How effective is your loyalty programme? A CLV analysis can help you find out. If your loyalty programme members have a higher CLV than other customers, it’s probably worth continuing. On the other hand, if there’s no correlation between your loyalty scheme and CLV, it may need to be reworked or scrapped altogether.
Understand acquisition costs in relation to CLV Understanding your acquisition costs in relation to CLV can be invaluable. If you know how much a particular demographic or customer group is likely to be worth throughout their relationship with your business, you decide if it’s worth the average acquisition cost to bring them in.
Cost savings and efficiencies are another plus. CLV helps you focus on the highest-value customers rather than taking a broad-brush approach to your marketing and communications. This could result in a lower marketing spend and help you increase the ROI of each marketing dollar.
At Datamine, we’ve managed CLV analytics projects in Australia and New Zealand for businesses in retail, insurance, entertainment and more.
Industries include:
Datamine has helped hundreds of Australian and New Zealand organisations understand their customers’ value. We work with clients throughout the analysis process, from goal setting and project design to analytics and deployment. Thanks to our deep knowledge of customer value and industry trends, we offer insight and guidance to ensure our clients get the most value from their analytics projects.
Want to measure the value of your customers? Get in touch to talk CLV with the Datamine team.
