1) The document analyzes customer lifetime value (CLV) for Unilever customers segmented into groups like The Loyalists and The Home Lovers. 2) The Loyalists have the highest overall CLV but a relatively low proportion from Unilever purchases, while The Home Lovers have a high Unilever proportion but lower reactivation rate. 3) Recommendations include upselling and cross-selling Unilever products to Loyalists to increase their Unilever spending by 5%, and using email/subscription incentives to boost The Home Lovers' reactivation rate to 22.5%, projected to increase their CLVs.

1. 1
CUSTOMER LIFETIME VALUE
Eric Xiong, Chien-Yu (Elaine) Su, Tianhong Chu, Dannie Hu, Biying Pan

2. 2
Overview01
03
02
Agenda
Methodology
CLV Analysis
04 Recommendation

3. 3
OVERVIEW

4. 4
UNILEVER CUSTOMERS SEGMENT OVERVIEW
The Home Lovers
Total Spending: 1984.75
TOF:35.85
Recency: 13.93
Freq: 5.68
The Loyalists
Total Spending: 3500.21
TOF:43.67
Recency: 10.21
Freq: 8.91
The Fresh Seekers
Total Spending: 1073.11
TOF:31.18
Recency: 13.41
Freq: 4.20
The Lazy Cats
Total Spending: 1547.06
TOF:33.73
Recency: 13.58
Freq: 4.66
The Frugal Spenders
Total Spending: 650.20
TOF:37.85
Recency: 30.10
Freq: 2.24
The Snackers
Total Spending: 1127.22
TOF:32.43
Recency: 13.29
Freq: 4.73

5. 5
UNILEVER MAJOR PRODUCT CATEGORY:
COOKING INGREDIENTS
21% of the revenue in the Cooking Ingredients
category comes from Unilever Products
44% of the orders in the Cooking Ingredients
category includes Unilever Products

6. 6
UNILEVER MAJOR PRODUCT CATEGORY:
HEALTH & BEAUTY
12% of the revenue in the Health & Beauty
category comes from Unilever Products
24% of the orders in the Health & Beauty
category includes Unilever Products

7. 7
METHODOLOGY

8. 8
1
COMPUTE OVERALL LTV
FOR ALL CUSTOMERS AS
THE BENCHMARK
2
COMPARE OVERALL LTV OF
UNILEVER CUSTOMERS
WITH BENCHMARK
3
COMPARE UNILEVER
CUSTOMERS LTV WITH
BENCHMARK WITHIN CLUSTERS
4
RECOMMENDATIONS5
COMPUTE THE
PROPORTION OF
UNILEVER PURCHASE LTV
IN OVERALL LTV

9. 9
ASSUMPTIONS
Inactivity does not necessarily signal the end of the
relationship
All “Buy” state customers have the same likelihood of
buying in the next period
All “No Buy” state customers have the same likelihood
of buying in the next period
Annual Discount Rate: 15%
Profit Margin: 40%

10. 10
TARGET PERIOD
TARGET
PERIOD
FIRST
PERIOD
April
2013
May
2013
2.
Calculate the probability that customers
who didn’t buy in the first period will buy
in the target period
1.
Calculate the probability that customers
who bought in the first period will
continue to buy in the target period

11. 11
VARIABLES FOR CLV CALCULATION
RETENTION RATE:
P0=＃of Retained Buyers / # of First Period
Buyers
REACTIVATION RATE:
P1=# of Reactivated Buyers / # of First Period
Non-Buyers
MONETARY:
m=
Buyer’s Average Total Spending In Target Period
FIRST PERIOD NON-BUYERS
FIRST PERIOD BUYERS
RETAINED BUYER
REACTIVATED BUYER
NEW BUYER

12. 12
Customer Lifetime
Value Analysis

13. 13
Average Monthly Spending by Segments
Unilever Customers VS Overall Customers
Spenders
Unilever Customers Have
Higher Average Monthly Spending

14. 14
Retention Rate by Segments
Overall Customers VS Unilever Customers
Reactivation Rate by Segments
Overall Customers VS Unilever Customers
Unilever Customers Have
Higher Retention Rate & Reactivation Rate

15. 15
Lifetime Value by Segments
Overall Customer VS Unilever Customers
36%
Unilever : A Motivator that Drives Higher Lifetime Value

16. 16
Unilever Customers
Proportion of Unilever Product LTV in Overall LTV
Loyalists contribute the Highest Lifetime Value to Unilever

17. 17
IMPLICATIONS
Inclusion of the Unilever products enhances customers' overall LTV
A win-win situation for both Unilever and the online grocery store
Target Segment 1: The Loyalists - highest overall LTV but relatively
low proportion of Unilever purchase
Target Segment 2: The Home Lovers - second highest overall LTV but
relatively low reactivation rate

18. 18
RECOMMENDATION

19. 19
The Loyalist - Segment Profile
Unilever Products Overall Products
Average Monthly
Spending
11.1 333
Retention Rate 66.10% 84.60%
Reactivation Rate 31.30% 35.40%
CLV 73.53 4038.1
Profile
● Hellmann's Real Mayonnaise
● 19.7% of the Loyal customers purchase
Hellmanns
Most Purchased Product

20. 20
Strategy 1: Upselling
Tactics May Include:
Strategy 2: Cross-selling
Tactics May Include:
Current Behavior
Frequent purchase but not much spending comes from
Unilever products
Marketing Objective
Increase Unilever product spending by 5% in the basket
The Loyalist - Marketing Strategy

21. 21
Unilever
Products
Overall Products
Average Monthly
Spending
10.4 446
Retention Rate 56.30% 77.50%
Reactivation Rate 21.40% 25.90%
CLV 52.16 2477.6
Profile
The Home Lovers - Segment Profile
Most Purchased Product
● 16.4% of the Loyal customers purchase
Hellmann's Real Mayonnaise
● 11.5% of the home loving customers buy
Q-tips cotton swabs

22. 22
Current Behavior
Proportionally higher spending on Unilever in the basket yet
lower reactivation rate
Marketing Objective
Enhance reactivation rate to 22.5%
The Home Lovers - Marketing Strategy
Strategy 1:
Email Re-engagement
Tactics May Include:
Offer Email - Incentives for Buy
Strategy 2:
Subscription Model
Tactics May Include:
Encourage customers to a subscribe and save
model by offering special discounts

23. 23
Projected Financial Impact
LTV: $73.53 => $80.88
9.9%
Increase average monthly
spending on Unilever products
by 10%
Loyalist
s
Loyalist
Increase reactivation rate
to 23%
Home
Lovers
LTV: $52.16 => $53.70
2.9%