Now is the time to let you know that prioritizing all your customers is just a waste of energy and resources. According to an article on Medium, in this new age of e-commerce, segmenting customers into the following categories helps in improving your Customer Lifetime Value (CLV):
1. Profitable
2. Highly Profitable
3. Not Profitable
Customer Lifetime Value (CLV) is the primary metric used for customer segmentation. CLV helps you understand your customers and predict the value of your relationship with them.
So, what else can CLV do to redevelop your clientele?
CLV offers an easy way to calculate your customer base value by the cost of acquisition and revenue and increasing repeat and loyal customers. Basically, CLV helps you to optimize your customers rather than acquiring a lot of customers. It is about spending to maximize value, rather than pursuing the minimal cost without considering value. Quality trumps quantity! CLV is steadily renewing and updating customer relationship management as well.
Why should you focus on CLV?
The irrefutable fact that you must accept is that not all customers are equal. So, you must treat your customers accordingly. Imagine a supermarket thronged by thousands of customers. The majority are only there for window shopping. The value that the majority of these customers bring is next to nothing. Hundreds out of the thousands come to buy things from the supermarket. Then they return to the same supermarket and make more purchases. They also spread the word about the supermarket to others – so you certainly want to give preferential treatment to the hundreds out of the thousands of customers to increase conversion, and eventually, retain and augment the value they bring. By focusing on CLV, you will know which customers you should prioritize and invest in.
CLV is fast becoming an imperative metric for brands to predict and manage customer value. Forecasting and management are formulated using quantifiable data. In this age of e-commerce, predicting and managing CLV is indispensable. The long-term goal for your CLV metric is to improve it. Take the Integrated Marketing 360 program offered by Genashtim in collaboration with eCornell to improve your CLV.
eCornell courses are approved by SkillsFuture Singapore for SkillsFuture Credit as well as by HRD Corp Malaysia under its SBL-Khas Scheme.