It’s quite obvious that in a modern digital savvy world only companies which can work with customers data can keep up with their competitors. What is the TOP of mind thing which comes to you when you think about Customer Lifetime Value (CLV)? To me it’s PROFIT or MARKETING. Mostly we tend to thing, that CLV is related to loyalty, profit calculation and return on marketing. However, the approach to use CLV differs within different industries. Let’s take a look at some industries which use CLV studies mostly for giving out money. 

1. Medicine 

For example in medicine during Board members meetings directors plan a certain health programs, they consider a CLV as a resource for strategic planning since each customer depending on his/her lifetime value deserves different treatment. Imagine a 16 year s old boy, who is a heavy smoker and a 80 years old smoker. Most likely, the government would do it’s best to save up from becoming a smoker the first patient rather than the second one. Consequently, the government would give an extra money to funds to promote healthy lifestyle or health programs (Robert W Palmatier, Shrihari Sridhar, 2017)[1][2]

2. Charity companies

CLV ultimate goal can be divided in two: make a person give more or make a person give longer.  Thus, if your company for example deals with blood donors, their idea is to keep each donor with them because if he only comes once, his blood will be useless and the funds invested in taking his blood will be money down the drain . Consequently, each company invest more money in making donors come again rather than just come[3]. Interestingly that in different countries they have different policy for blood donor to reduce donors retention: in Russian Federation they give you a two days off and a cash while in USA donors do not get anything. 

3. HR Management

The longer employee stays with a company, the stronger this company will be. That’s of no use to invest in education and adoption of an employee and in a short period of time watch him leave. That’s why the best HR companies not only find technically perfect candidate but also check if he/she matches a company values and rhythm. Moreover, companies are ready to pay an extra money to good HR managers to analyze employee flow and minimize it[4]. Thus, CLV is not a monetization tool in this case as well. 

Hopefully, this short post made you think differently in terms of CLV usage. 

Sources:


[1]“Marketing Strategy. Based on First Principles and Data Analytics”, Robert W Palmatier, Shrihari Sridhar, 2017

[2]“Customer Lifetime Value: How to Calculate It for High LTV Medical Practices & Why It Matters”, 2017, URL: https://www.closerscafe.com/why-customer-lifetime-value-matters-to-medical-practices/

[3]“Measuring Lifetime Value in Your Non Profit CRM”, Mckenna Bailey URL: https://www.virtuouscrm.com/blog/marketing/measuring-lifetime-value-non-profit-crm/

[4]“Effective HR Management in the Union Environment (Clv Reports)” Jamie Knight, 2017

5 комментариев

  1. Thanks to Natalya for overview of CLV in different spheres, not connected with direct consumption of products or services in its classic understanding.
    First of all, I had a new look on CLV and now I understand that CLV is not only monetization, it’s more about optimizing organization’s budget. It is obvious that no company wants to spend a lot for a client/partner/employee who will take more than bring.
    Secondly, realizing that decisions made by medical organizations are driven by CLV of different types of “clients” is abrupt. Especially when you understand that it is made unperceived – this is the best evidence of usefulness and validity of marketing instrument, I believe.

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  2. Natalia, I really appreciate you for this view on the CLV. I’ve never thought that this indicator could be considered from such sides but you open my eyes and I realize that it’s really very important to treat customer not as a «product» who bring money to us but as a person with his own values. Unfortunately, in our modern time when everyone think about business and money we forget about human value. And I believe if we make all conditions for comfortable living and works, invest to it it will return minimum in a double size because everyone need love and care, including from the customer and governments. Thanks a lot from the bottom of my heart!

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  3. Thanks a lot to Natalya for this outstanding article! Totally agree with main ideas that it contains!

    I found for myself that CLV index may be important in decision making about client not only in terms of getting revenue, but also as complex stream of managing company’s costs. Correct distribution of budget within the organisation is crucial for efficiency of workflows.

    Many thanks to author for description of CLV for its application in medicine — I have never thought that such institutions may apply such approach for their internal processess.

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  4. Wow, thans to Natalya, never thought of such different ways of CLV usage. Usually CLV is considered as a monetization tool but the cases in the article proves that this is not the only way.

    Whether you have a fully digital business, a traditional offline business or some combination of the two, calculating CLV can help make smarter decisions about marketing and sales budgets and bring better returns on investments. The formula in this cases is known for a long time.

    Talking about the cases in the article. Will CLV be calculated in other ways that we are used to?

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  5. Павел Сивов

    The question may arise: how do I calculate my LTV? I want to recommend using a tool like Fundraising Report Card. Fundraising Report Card calculates donor lifetime value for you.

    With that being said, let’s address the data you need to accurately create your lifetime value projections. To calculate donor lifetime value, you’ll need three inputs: Donor lifespan, Average donation amount, Frequency of donation

    Source: https://fundraisingreportcard.com/learn-more/#dashboards

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