Not all customers are created equals, companies today are dealing with customers through multiple channels, who is the valuables customers and how can we focus on the right customer?
How can a company know its customer equity and how much their customer worth not in the past and present only but in the future as well, knowing your customer equity is definitely the base to confirm and measure the success of sales and marketing strategies.
Customer centricity is a strategy that aligns a company’s development and delivery of its products and services with the current and future needs of a select set of customers in order to maximize their long-term financial value to the firm.
Answering the question of how a company can align its products and services with the wants and needs of its most valuable customers is always a challenging if we don’t use the right metric “Customer Life TimeValue (CLV)” that allow us to measure the individual value (now and in the future) for every individual customer.
Calculating CLV for every individual customer and monitoring it over time will enable more efficiency :
- Individually for each customer by customizing the right offer based on the customer value
- Identify who are the most valuable customer and their profile and attract same profile customers
- Assist an on answering the question of what we should be willing to spend to acquire new customers and enables us to make better decisions about the allocation of marketing resources.
- Identify customer churn risk and measure the success of sales and marketing strategy and confirm if the objectives sets are achievable through our customer base or not. The measure that can drive all of the above is the Customer Life Time Value (CLV).
- CLV is the base of customer centric strategy. It is the unit of measurement that estimate the customer equity, consequently, help to create greater firm value. CLV estimate the value of our customers individually and collectively.