The Customer Lifetime Value (CLTV) is a metric used in marketing and sales to calculate the economic value a customer brings to a company over the course of their relationship. This metric is important for several reasons:
Knowing the CLTV of customers allows companies to make more informed strategic decisions. For example, they can allocate resources more efficiently by targeting customers with higher CLTV and develop strategies to retain those customers over time. Additionally, it can help identify opportunities to increase customer value through additional sales, improved customer service, or loyalty programs.
“Satisfied customers are the best source of advertisement and the most valuable asset a company can have in terms of Customer Lifetime Value.” – Philip Kotler
CLTV can also be used to segment customers into high, medium, and low-value categories, allowing companies to tailor their strategies and actions specifically to each group. For example, high-value customers may receive preferential treatment or additional benefits, while low-value customers may be targeted with retention efforts or upselling to increase their CLTV.
In summary, Customer Lifetime Value is an essential metric that enables companies to understand the economic value each customer can generate over their relationship with the company. It helps them make strategic decisions, calculate return on investment, and segment customers more effectively, contributing to long-term growth and profitability.
Power BI Dashboard:
