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Atricle Dump - Customer Lifetime Value - CLV - What Does it Really Mean?
As technology becomes ubiquitous, we are still going to need the soft skills, to compete and become a successful business. Development of these skills -- oral and written communications, decision-making, self esteem, overcoming the fear of speaking to groups, call reluctant and teamwork -- will be the differentiation of successful businesses built to last, oppose to those that vanish.Today, any good breakthrough idea can spread like a wildfire globally, within seconds, in the technology economy. Technology, innovation and marketing, accelerates the speed, but it is the people, their passion and skills that sustain optimal growth and culture for an organization.
You have a detailed business plan, which showed the overall intent of your company. You presented the business plan to your bank before start-up and they submitted funding in the amount that you both deemed acceptable. The original business plan contained the basis of the procedures that will help you stay focussed while the company grows. Let's examine some of these processes that you will use to give your business the focus it needs to grow and succeed.1. A marketing plan. If sales are a part of your operation (and it seems that some form of selling is always a big part of every company), then, you will need to have your sales group focussed on a marketing pl
The hardest part of calculating CLV is figuring out exactly what your customers’ “lifetime” really is…. and the only accurate way to arrive at that number is by getting, storing and analyzing your customers’ data. Period. If you’ve been in business for a while, this should be easy to get, but if you’re a start-up you’re going to have to estimate this based on industry standards.
Although there are several ways to arrive at CLV, the easiest is to calculate:
1. The average length of time a customer stays your customer
2. The number of transactions that an average customer will have with you during that time and
3. The average dollar amount per transaction
Multiply these together and you’ll arrive at a usable number. But remember, junk in, junk out… so make sure your original numbers are accurate!
Once established, you can use your CLV as a benchmark for developing a realistic customer acquisition (or retention for that matter) budget. For example, let’s say you find out that your average customer:
1. Stays with you for 5 months
2. Purchases something from you 3 times per month
3. Spends an average of $2 per transaction
In this case your average CLV would be $30. Based on this, it would be foolish to spend even $20 to gain one customer… you’d be left with little, or no, profit (unless of course, your margins are outrageously high). On the other hand, your customers may hang in there for 22 months, spend $20 per transaction and purchase from you a greater number of times. Since your CLV would be much higher, you could afford to pay more to gain a custom
Do you have an idea or vision for the future? Does your idea fire you up and excite you? I am not talking about an ordinary level of excitement, I am talking about burning passion to see your idea turn into reality. Do you believe in your idea? More importantly, do you believe in yourself? I am talking about serious faith in your idea and your ability to turn it into reality. If you don’t, you probably won’t.Someone once said: “If you can think it, you can achieve it” I would add to that statement: “If you believe it”… and the most important “it&r
Although there are several ways to arrive at CLV, the easiest is to calculate:
1. The average length of time a customer stays your customer
2. The number of transactions that an average customer will have with you during that time and
3. The average dollar amount per transaction
Multiply these together and you’ll arrive at a usable number. But remember, junk in, junk out… so make sure your original numbers are accurate!
Once established, you can use your CLV as a benchmark for developing a realistic customer acquisition (or retention for that matter) budget. For example, let’s say you find out that your average customer:
1. Stays with you for 5 months
2. Purchases something from you 3 times per month
3. Spends an average of $2 per transaction
In this case your average CLV would be $30. Based on this, it would be foolish to spend even $20 to gain one customer… you’d be left with little, or no, profit (unless of course, your margins are outrageously high). On the other hand, your customers may hang in there for 22 months, spend $20 per transaction and purchase from you a greater number of times. Since your CLV would be much higher, you could afford to pay more to gain a custo
Do you have an idea for an electronic product, the next must-have gadget, music or video system, time saver, or greatest problem-solving device that was ever invented? Even if you have the electronics product design expertise available, there are a number of tasks that you must complete and issues that you must resolve before you have an actual product design that can be produced, marketed, and sold. Once you have completed a product specification document and a marketing study, you should be prepared to have the product electronics and packaging design processes begun so that a prototype unit can be assembled and tested.One of the first choices that must be
1. The average length of time a customer stays your customer
2. The number of transactions that an average customer will have with you during that time and
3. The average dollar amount per transaction
Multiply these together and you’ll arrive at a usable number. But remember, junk in, junk out… so make sure your original numbers are accurate!
Once established, you can use your CLV as a benchmark for developing a realistic customer acquisition (or retention for that matter) budget. For example, let’s say you find out that your average customer:
1. Stays with you for 5 months
2. Purchases something from you 3 times per month
3. Spends an average of $2 per transaction
In this case your average CLV would be $30. Based on this, it would be foolish to spend even $20 to gain one customer… you’d be left with little, or no, profit (unless of course, your margins are outrageously high). On the other hand, your customers may hang in there for 22 months, spend $20 per transaction and purchase from you a greater number of times. Since your CLV would be much higher, you could afford to pay more to gain a custo
Last time we talked about the steps on how to skip trace an account. Let’s expand on that a little more. Get something to take notes with-because there is going to be a test, go ahead I’ll wait.Now, let’s get started.This is how the test starts. You are given a stack of accounts to work. You have never seen them before. If you find them, you collect what is owed and you are the company hero, if not…Question one. What is the best way to filter an account so it is worked effectively?A) It was done by someone else before it got to me.B) Not worry about it.C) You filter again to ensure that you will not waste your time working an
1. Stays with you for 5 months
2. Purchases something from you 3 times per month
3. Spends an average of $2 per transaction
In this case your average CLV would be $30. Based on this, it would be foolish to spend even $20 to gain one customer… you’d be left with little, or no, profit (unless of course, your margins are outrageously high). On the other hand, your customers may hang in there for 22 months, spend $20 per transaction and purchase from you a greater number of times. Since your CLV would be much higher, you could afford to pay more to gain a custo
A great way to get your name around town is to ask a few bar and restaurant owners if they would use your placemats or drink coasters if you supplied them for free.Free placemats and coasters are not a tough sell and think about the number of people that would read your placemat or notice a well designed coaster, if you were to make a deal with a restaurant or two.For the placemat, just an advertisement could be unappealing to the restaurant owner. So, do a list of fun local facts or some clean jokes and make yourself the sponsor.For coasters, some great artwork is all that's needed. It can usually be a blatant ad as long as it looks good.P
It is crucial that you understand your CLV and use it to guide your communication decisions! (A good book on this subject is Donald Lehmann and Sunil Gupta’s, “Managing Customers as Investments”… visit our website, www.StrategicMarketingAdvisors.com for a review and ordering information.)
3. Your specific goals, such as:
* Acquiring “x” numbers of new customers
* Increasing the number of current customer transactions
* Increasing the length of time your customers remain your customers
4. Proposed media costs and actual/forecast response and sale rates (you can find these out online or from any reputable advertiser)
Once armed with this information, you’ll be in a good position to choose. Here’s an example of how this might work. Let’s assume the following:
* I am a widget retailer
* My goal is to get 1,000 new customers this year
* I will get 200 customers whether I do “anything” or not… (for example word-of-mouth, walk- ins, etc.)
* That means, I need to acquire the remaining 800 using some form(s) of advertising
* I can spend $40,000 to “buy” these 800 new customers
* My CLV is $40
* After careful consideration, I decide to conduct a direct mail campaign
* Based on my careful research and experience, I know that I c
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