Marketing and the Measuring of Customer Lifetime Value ( CLV)

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Customer Lifetime Value and Customer Aquisition Cost reviews from a small business prespective, presented at Narayna Labs EGADE start up series...May 2014 by Dr. Salvador Trevino-Martinez, Global Marketing Strategy Professor. Tecnologico de Monterrey. For Lecture purposes only

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Marketing and the Measuring of Customer Lifetime Value ( CLV)

  1. 1. Customer Value: Business Value Customer Lifetime Value Customer Acquisition Cost Dr. Salvador Treviño-Martinez National Alumni Relations Director Global Marketing Strategy Professor Tecnológico de Monterrey EGADE Business School
  2. 2. AGENDA  CUSTOMER VALUE  BUILDING CUSTOMER VALUE  CUSTOMER LIFETIME VALUE  CONCEPT  FORMULA  APPLIYING IT TO YOUR BUSINESS  CUSTOMER AQUISITION COST  CONCEPT  FORMULA  APPLYING IT TO YOUR BUSINESS  FINAL REMARKS saltrevino@hotmail.com - double click images for credit and sources 2
  3. 3. MARKETING CLUES TO CUSTOMER VALUE EXCHANGE SATISFACTION MUTUAL BENEFIT saltrevino@hotmail.com - double click images for credit and sources 3
  4. 4. WISEGEEK.COM DEFINES CUSTOMER VALE IS THIS CUSTOMER VALUE? saltrevino@hotmail.com - double click images for credit and sources 4
  5. 5. NIKITA JETHANI´S PROPOSITION TO BUILDING CUSTOMER VALUE  IS THIS HOW YOU BUILD CUSTOMER VALUE? saltrevino@hotmail.com - double click images for credit and sources 5
  6. 6. Customer Lifetime Value  What is the value of a business relationship over time?  Loyalty over promotion value  Measuring the so-called VALUE  Two approaches: Qualitative AND QUANTITATIVE saltrevino@hotmail.com - double click images for credit and sources 6
  7. 7. Customer Lifetime Value Qualitative approaches saltrevino@hotmail.com - double click images for credit and sources 7
  8. 8. Customer Lifetime Value Quantitative Approach From Farris and coauthors´ Marketing Metrics Textbook: CLV IS DEFINED AS: THE NET PRESENT VALUE OF ALL FUTURE CUSTOMER CASH FLOWS DURING ITS RELATIONSHIP WITH THE COMPANY FORMULA: CLV = saltrevino@hotmail.com - double click images for credit and sources 8
  9. 9. EXCERCISE  From zeromillion.com site, a useful spreadsheet  http://www.zeromillion.com/marketing/determining-lifetimevalue.html  Instructions  1. Download spreadsheet  2. Enter actual or estimate information  3. What does the outcome value mean? saltrevino@hotmail.com - double click images for credit and sources 9
  10. 10. CUSTOMER AQUISITION COST GENERAL APPROACH MUCH SIMPLER THAN CUSTOMER LIFETIME VALUE THE IDEA IS TO ESTIMATE HOW MUCH MONEY IS SPENT GENERATING, MAINTAINING OR LOSING CUSTOMERS GREAT INSIGHTS FROM THE DATABSE MARKETING INSTITUTE saltrevino@hotmail.com - double click images for credit and sources 10
  11. 11. EXCERCISE  http://blog.priceintelligently.com/blog/bid/189868/A-Guide-to-SaaS- Metrics-and-Your-Pricing-Strategy-Customer-Acquisition-Cost  How do you apply this formula in your business?  What expenditure-items can you consider “acquisition costs”  What does the outcome of this formula imply? saltrevino@hotmail.com - double click images for credit and sources 11
  12. 12. FINAL REMARKS  IMPORTANCE OF CUSTOMER DATA AND RECORDS  NON-INTRUSIVE; PERMISSION MARKETING APPROACHES  FORMULAS ARE ALWAYS SUBJECTIVE AND SUBJECT TO IMPROVEMENT  DATA EVOLVES OVER TIME, THINK IN TERMS OF FUTURE RELATIONSHIPS  CUSTOMER LIFETIME VALUE AND CUSTOMER AQUISITION FORM ARE TOOLS FOR DECISIÓN MAKING.  SERVICING THE CUSTOMER IS WHAT REALLY MATTERS saltrevino@hotmail.com - double click images for credit and sources 12

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