In most cases, businesses want to use a Lifetime Value Analysis to identify who their most valuable customers are. From there, the information is used to:
- Determine the likelihood of churn, and track where in the average lifetime churn is likely to happen
- Determine valuable customers’ priority and how the business should treat them
- Use the ‘profile’ of the high value customers to determine how much money is worth spending to acquire someone similar in the future
Beyond these two factors, there are many reasons a client would be interested in getting a sense for the value that individual customer groups add to the business. At the beginning of a CLV project, Datamine sits down with the client to understand fully why they want this information and how they’re going to implement change using the calculations. This initial discussion is also important to determine what exactly a ‘lifetime’ is for a client, as it can vary drastically between industries and business types.
A CLV is a similar analysis to other solutions Datamine offers, such as customer churn analysis, loyalty programme evaluation and NPS score – all of which are designed to help clients get a better understanding of their customer.
Datamine worked with a client in the fuel industry who wanted an estimated lifetime value of their customers – they wanted to see what a given person’s fuel consumption curve might look like over time, not only within their customer base but across the industry as a whole. Using the analysis, the client was better able to plan targeted communications and promotions to potentially valuable customers, as well as nurture their existing high-value customer base.