This note presents two associated measures for assessing the monetary worth of a customer to the company. The very first is the well known measure of Customer Lifetime Value, or CLV for short. The 2nd, which has received much less attention, treats the acquisition of a customer as a monetary investment that has a quantifiable return based on future profit streams.
We further reveal how applying CLROI can give wildly different marketing consequences relative to CLV (despite the strong link between them), especially for targeting decisions. The note provides multiple examples to illustrate the theories as well as introduces formal characterizations of the two measures. The relevance of section sizes, customer dynamics, social network influences, and strategic concerns are discussed.
PUBLICATION DATE: October 15, 2014 PRODUCT #: 515049-HCB-ENG
This is just an excerpt. This case is about SALES & MARKETING
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