Consumer Lifetime Value (CLV): is the present value of cash flows from a customer relationship, can help managers in decision making related to investment in developing customer relationships
Consumer lifetime value (CLV), which is the present value of cash flows from a customer relationship, can help managers in decision making related to investment in developing customer relationships, as it is used to measure the value of the current customer base. If the management is using the customer value in their decision-making process, then CLV is a useful tool for them.
Unmuddling CLV:
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The authors suggest that CLV calculations should not include the customer acquisition cost and the estimated CLV should be compared to the estimated acquisition cost to derive conclusions. The bigger the difference between the estimated CLV and the estimated acquisition cost, the better the acquisition campaign.