Customer's Lifetime Value (LTV) Measure
A Customer's Lifetime Value (LTV) Measure is a lifetime value measure of customer value for a single customer.
- Context:
- It can range from being a Actual LTV to being Predicted LTV.
- It can be decomposed into To-Date Customer Value with Remaining Customer Value.
- It can be used to calculate Total Customer LTV.
- It can be associated to a Customer's Long Term Value.
- …
- Example(s):
- John Doe's predicted remaining LTV is -$341.38
- Jane Doe's remaining LTV was $1,341.38
- Counter-Example(s):
- See: Customer Relationship Management, Net Profit, Customer Churn Measure.
References
2014
- (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/Customer_lifetime_value Retrieved:2014-6-24.
- In marketing, customer lifetime value (CLV) (or often CLTV), lifetime customer value (LCV), or user lifetime value (LTV) is a prediction of the net profit attributed to the entire future relationship with a customer. The prediction model can have varying levels of sophistication and accuracy, ranging from a crude heuristic to the use of complex predictive analytics techniques.
Customer lifetime value (CLV) can also be defined as the dollar value of a customer relationship, based on the present value of the projected future cash flows from the customer relationship. Customer lifetime value is an important concept in that it encourages firms to shift their focus from quarterly profits to the long-term health of their customer relationships. Customer lifetime value is an important number because it represents an upper limit on spending to acquire new customers.[1] For this reason it is an important element in calculating payback of advertising spent in marketing mix modeling.
One of the first accounts of the term Customer Lifetime Value is in the 1988 book Database Marketing, which includes detailed worked examples. [2] Early adopters of Customer Lifetime Value models in the 1990s include Edge Consulting and BrandScience.
- In marketing, customer lifetime value (CLV) (or often CLTV), lifetime customer value (LCV), or user lifetime value (LTV) is a prediction of the net profit attributed to the entire future relationship with a customer. The prediction model can have varying levels of sophistication and accuracy, ranging from a crude heuristic to the use of complex predictive analytics techniques.
- ↑ Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. Upper Saddle River, New Jersey: Pearson Education, Inc. ISBN 0137058292. The Marketing Accountability Standards Board (MASB) endorses the definitions, purposes, and constructs of classes of measures that appear in Marketing Metrics as part of its ongoing Common Language: Marketing Activities and Metrics Project.
- ↑ Shaw, R. and M. Stone (1988). Database Marketing, Gower, London.
2009
- (Kohavi et al., 2009) ⇒ Ron Kohavi, Roger Longbotham, Dan Sommerfield, and Randal M. Henne, (2009). “Controlled Experiments on the Web: survey and practical guide.” In: Data Mining and Knowledge Discovery, 18(1). doi:10.1007/s10618-008-0114-1
- QUOTE: A single metric forces tradeoffs to be made once for multiple experiments and aligns the organization behind a clear objective. A good OEC should not be short-term focused (e.g., clicks); to the contrary, it should include factors that predict long-term goals, such as predicted lifetime value and repeat visits.