Customer Lifetime Value (CLV) is a concept which first appeared in marketing textbooks in the late 1980’s, and as all marketers probably know it can be simply defined as the revenue you receive from a customer less the cost to acquire and serve your customer. It is a central metric for most brands as it measures the value of one of your brand’s most important assets; your customer relationships. In a recent Sitecore/Econsultancy joint report, nearly 9 out of 10 respondents see that delivering a great customer experience is key to driving customer loyalty, and over three quarters believe that CLV is important to their organisation.
Why is CLV important? CLV as a measure in across all sectors is going to become more and more important as customers differentiate brands in terms of the customer experience they offer. To boost customer lifetime value, brands would typically invest in customer services and retention teams to stop customers leaving and reduce churn, but with digital, brands can cost-effectively keep a constant communication flow, a conversation with their customers, which can respond to the customer’s real-time needs, and develop and implement personalised plans for each customer.
Get your customer experience management right and brands can extend the customer lifetime, not only in terms of the length of the relationship but also through responding, predicting and delighting your customers along their customer journey with you, there will be more opportunities to generate additional revenue and introduce your customers to new products and services of interest.
Our research also showed that only 42% of brands can actually measure CLV, due to the systems and structures they currently deploy, and one of the primary considerations when measuring CLV is having the ability to drill down to the individual customer, a single, real-time customer view. Building customer lifetime value requires a relentless focus on your customers – each one of them, and brands understand that getting a single customer view is the most important capability they need to have. This single customer view needs to include a wide range of insight, from your back office, CRM, ERP systems to web and social channels.
From our research, brands are clear on how they want to increase their CLV, with a focus on improving their customer experience, and to achieve this they recognise they need to get much smarter with their use of data, to adopt this collect, connect, act approach with data – collecting the most relevant data in real-time, connecting the data to the customer and the experience and then deliver the experience based on that insight.
So, what’s stopping brands building their CLV. Two main barriers emerge, to deliver a joined-up customer experience, organisations need to be joined up in the first place, with many departments claiming to own the customer experience, and even divisions within marketing not working together.
With the departments not joined up, and with the systems the brands are using are not integrated, this has an immediate effect on the customers as they can see that the customer journey is not consistent and has lots of holes, making the poor systems integration very visible to the customer.
To achieve success in building CLV, brands will need to get the right technology in place, with a customer experience management platform that can bring all the insight together, and then take action on that insight across all channels and all stages of the customer’s journey with you. Internally, all departments that have involvement with the customer need to come together and jointly develop the customer journey to avoid the obvious holes and poor handovers that customers have to sometimes endure.
With these pillars in place, brands can then start to delight their customers with personalised, attentive marketing that addresses each consumers’ individual needs, whether they are interacting with you for the first time or are a long-term customer.
For a complimentary copy of our joint report with Econsultancy, click here.
By Shawn Cabral, Marketing Director for Sitecore UK.
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