Customer Lifetime Value

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Customer Lifetime Value (CLV, or sometimes known as CLTV) is a predictive metric that indicates how much revenue your business can expect from a single customer during the time left of your relationship. This is an important element in CRM marketing often used to identify segments that are the most or least valuable to you.

Engage calculates the customer lifetime value by estimating how much time a customer has left as an active member. The estimated income in revenue during this time is multiplied with a fixed margin and capital cost (for future years as active customer) to give you an estimate on the potential profit left within the remaining member lifetime.

This is a valuable metric used to measure the estimated future financial value of each customer and can be included in a loyalty program strategy, for example when building automations and creating segments.

Use the CLV to prioritize your activities

Now, the CLV is set to predict future potential but doesn't tell you how the customer has been spending and visiting your business in the past. You should still, of course, show your historically loyal customer your appreciation. But it's important to know that he/she may not be the one you should work on the hardest. There might be other customers with a better lifetime prognosis that is more valuable and profitable for you to encourage going forward.

Create a strategic framework

Your customer’s CLV can easily be included as a criteria when you create segments in Engage. The easiest way to start is by creating a strategic framework that aligns with your overall strategy. Example:

This model can then be used to build triggered customer journeys. Here's an easy example of such an automation:

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