What is lifetime value of customer and how can marketers maximize it?

1. What is lifetime value of customer and
how can marketers maximize it?

2. Marketing is art of attracting and
keeping profitable customers.

3. Customer Profitability
Profitable customer is a
person, household or
company that over time
yields a revenue stream
exceeding by an
acceptable amount

4. Emphasis is on
LIFETIME stream of
revenue and cost, not
the profit from a
particular transaction.

6. What should be done about customer
2 and 3…
● raise the price of less profitable products
or eliminate them
● try to sell customer 2 and 3 profit making
products
● encourage unprofitable customers to shift
to competitors.

7. CPA is best calcualted with
tools of an accounting
technique called ABC
Activity Based Costing.

8. ABC includes…
Cost of making and distributing
products and services.
Taking phone calls from
customers.
Travelling to visit customer.
Paying for entertainment and
gifts.

9. Measuring Customer lifetime value
Describes net
present value of
stream of future
profits expected
over customer’s
lifetime purchases.

10. Created by:
Saumya Gupta
NIT Surat
Internship under Prof. Sameer Mathur
IIM Lucknow
www.IIMinternship.com