Customer's Lifetime Value (LTV) Measure

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A Customer's Lifetime Value (LTV) Measure is a lifetime value measure of customer value for a single customer.



References

2014

  • (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/Customer_lifetime_value Retrieved:2014-6-24.
    • In marketing, customer lifetime value (CLV) (or often CLTV), lifetime customer value (LCV), or user lifetime value (LTV) is a prediction of the net profit attributed to the entire future relationship with a customer. The prediction model can have varying levels of sophistication and accuracy, ranging from a crude heuristic to the use of complex predictive analytics techniques.

      Customer lifetime value (CLV) can also be defined as the dollar value of a customer relationship, based on the present value of the projected future cash flows from the customer relationship. Customer lifetime value is an important concept in that it encourages firms to shift their focus from quarterly profits to the long-term health of their customer relationships. Customer lifetime value is an important number because it represents an upper limit on spending to acquire new customers.[1] For this reason it is an important element in calculating payback of advertising spent in marketing mix modeling.

      One of the first accounts of the term Customer Lifetime Value is in the 1988 book Database Marketing, which includes detailed worked examples. [2] Early adopters of Customer Lifetime Value models in the 1990s include Edge Consulting and BrandScience.

  1. Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. Upper Saddle River, New Jersey: Pearson Education, Inc. ISBN 0137058292. The Marketing Accountability Standards Board (MASB) endorses the definitions, purposes, and constructs of classes of measures that appear in Marketing Metrics as part of its ongoing Common Language: Marketing Activities and Metrics Project.
  2. Shaw, R. and M. Stone (1988). Database Marketing, Gower, London.

2009