Fundamentals Of Customer Lifetime Value in CRM

Examining Customer Lifetime Value in CRM


Customer Lifetime Value (CLV) can be seen as the expected financial benefit from customer retention investment to build customer loyalty, Simply, it is the total amount that you expect your customers to spend on your product throughout their lifetime.



Lifetime Value of a Customer

By calculating CLV, you as a CRM manager can measure the expected financial benefits from customer retention investment to build customer loyalty You will be able to know which of your customers you should invest in and the one that you don’t need to bother yourself about.

The calculation of the lifetime value of your customer will reveal the lifetime cost of the customer which includes acquisition cost, operation expenses and customer services that you offer to your customer. It will also show the expected lifetime revenue of a customer.


Importance of CLV

From what we have said, CLV will allow customer-centric organizations to know what they should expect from their customers. There are many benefits that accrue to CCEs.

One of the benefits that can be attributed to CCE is the fact that it allows organizations to minimize wastage and maximize cost. It will help you to know the number of resources that you could spend on a particular customer

Examining Customer Lifetime Value in CRM

Another benefit of lifetime value is that it will allow organizations to come up with strategies and programs that will enable them to give their customers a “wow” experience. If you have a profitable customer base, you will not want to lose them. You will want to put machinery in place in order to ensure that the customers are satisfied so that they can remain with you for life. That is why you have to carry out a comprehensive CLV analysis of your customers in order to know the proper way of serving them better.


YOU CAN ALSO READ  5 Must Have Features of a Good Salesforce Software


Maximizing Lifetime Value of a Customer

This requires that you maximize the rate of new customer acquisition, the conversion rate of prospects to buyers and the repeat frequency of existing customers. When you want to get the best from your customers, you have to improve the rate at which you convert prospects to buyers. You must also guide against losing your hard earned customers to your competitors.


You should know that it is very expensive to acquire new customers. Besides, the new customers are not contributing to your profit base now, they will be contributing in the future. It is from your existing customers that the bulk of your profit is coming from. That is why U is not logical for you to build your business on your first-time buyers alone.


YOU CAN ALSO READ  The Customer Intelligence Cycle Environment

In a product-centric enterprise, profits are determined by calculating the cost of the product and other associated costs and subtracting if from the total cost but in a CCE, you have to consider the customer service cost and weigh it against the lifetime value of a customer. You have to increase what you spend on customer value. Therefore CLV is a projection of what a customer will worth in the future.


The purpose of CLV is to encourage the organisation to spend a large percentage of its resources on adding value to their customers. The application of CLV is to encourage organizations to embark on programs that will improve customer lifetime value.



In this chapter, we have discovered that:

  • CLV is the expected value that a customer is expected to contribute to your organisation over their lifetime.
  • CLV is also the calculation of the acquisition cost, operating expenses and customer services.
  • CLV wilt help organizations to minimize wastage and maximize cost.

With the knowledge of CL~ you should be able to raise exit barrier and draw

more people to your lifecycle.

  • CIV can help organizations to spend their resources effectively on adding value to their profitable customers.


YOU CAN ALSO READ  Use of Contact Management Software in CRM


Brainstorming Session

  1. What is Customer Lifetime Value? How can you maximize the lifetime value of a customer?
  2. Discuss the reasons why top management in various organisations in Nigeria is afraid of CRM?


Now tell us your own side of this story.

We would also like to hear what you feel about the topic we discussed today. Your feedback is very important to us. Feel free to drop your comments and recommendations. If you have a contrary opinion, you can drop that too.

You can also join our Facebook Page CRMNigeria for more updates. You can do that by clicking on the link or searching for our page on Facebook.


You can also join our WhatsApp Group Here.

Finding the right Long-tail Keywords? Start your journey here.

 73 total views,  37 views today

Adeniyi Salau

Adeniyi Salau Scrum Master Certified , CCNA R&S , BeingCert and Scrum Certified Digital Marketing Professional, CEP, MOS, MCP, CSCU (Project 2016), Microsoft Certified Security and Networking Associate is a Google and Beingcert Certified Digital Marketer, Project Manager and SEO Expert of repute with about a decade of Blogging and online marketing experience. He is always ready to share his experience with others.

Write a Comment

Your email address will not be published. Required fields are marked *

CommentLuv badge
%d bloggers like this: