Customer retention rate should increase over time

 formula, retention  Comments Off on Customer retention rate should increase over time
Jul 232016
 
Customer retention rate should increase over time

One of the major impacts on overall customer lifetime value (CLV) is the firm’s ability to retain customers. An increased loyalty rate can substantially increase the average lifetime period of the customer, resulting in a significant increase in customer lifetime value. However, it is unlikely that any cohort of customers will have a static retention […]

Customer lifetime value – does the average lifetime period make sense?

 formula  Comments Off on Customer lifetime value – does the average lifetime period make sense?
Jul 232016
 
Customer lifetime value – does the average lifetime period make sense?

Perhaps one of the confusing aspects of calculating customer lifetime value (CLV) is working out the average period that a customer purchases from the firm/brand. Sometimes it seems inconsistent with the percentage of customers retained. In this article, we will work through why this sometimes seems to be an inconsistency. For this example we will […]

Using the retention rate to calculate average lifetime period

 formula  Comments Off on Using the retention rate to calculate average lifetime period
Jul 232016
 

When calculating customer lifetime value (CLV), one of the key inputs is the number of years that the average customer will purchase from the firm. This is surprisingly easy to calculate if you know the loyalty/retention rate of customers. The formula for average lifetime period of customers is simply 1/(1-retention rate). You should know that […]

Existing Customer CLV Formula

 formula  Comments Off on Existing Customer CLV Formula
Jun 182016
 
Existing Customer CLV Formula

A fairly standard CLV formula that you will find for measuring the lifetime value of existing customers is: CLV = m.r/1+d-r Where m = customer margin (or profit contribution) per year Where d = discount rate And r = retention/loyalty rate per year Important note: This formula is designed to measure the customer lifetime value of […]

Customer Lifetime Value: Existing versus new customers

 formula  Comments Off on Customer Lifetime Value: Existing versus new customers
Jun 182016
 
Customer Lifetime Value: Existing versus new customers

Are you measuring the CLV of existing or new customers? Customer lifetime value calculations, and the most suitable CLV formula to use, will vary depending upon what type of customer that you are attempting to measure. To make this point quite simply, there are two main types of customers that we are seeking to measure […]

Reconciling Customer Lifetime Value with Total Profits

 profitability  Comments Off on Reconciling Customer Lifetime Value with Total Profits
Feb 112016
 

The accounting challenge of customer lifetime value One of the key challenges with communicating the benefits of customer lifetime value (CLV) as a key marketing metric is its alignment (or perceived lack of) with the firm’s overall profitability. Take for example, a marketer who has determined that the firm’s CLV is $300 (before taking into […]

Calculating Customer Lifetime Value for Banks

 banking  Comments Off on Calculating Customer Lifetime Value for Banks
Nov 192015
 

How to calculate customer lifetime value (CLV) for a bank Having had a corporate background in banking, I found that customer lifetime value was a key marketing metric in the finance sector. This is because banks (and other financial institutions) will hold customers for a long period of time and the customers will go through […]

Mar 202015
 

Return on marketing investment: A Case Study of the Domestic Airline Industry in India (research paper) This is an excellent research paper, ideal for anyone seeking a more detailed understanding of customer equity and customer lifetime value. The paper also provides good insight into the airline industry in India, as one of the co-authors is […]