Brand loyalty. Lower costs. Increased sales and profits. These are just some of the key benefits of quantifying the long-term value of customers. Getting it right requires the CMO and CFO to work together.
Growing customer demand for more personalized, high-value experiences is putting pressure on marketing functions to quantify the impact of their efforts to build loyalty. The Customer Lifetime Value calculation forecasts the revenue and profit associated with developing a long-term relationship between a customer and their organization. This calculation then drives marketing spend decisions, including which customers to target and which activities to renew or drop.
A lack of data and analytics modeling expertise, emerging technologies and technology channels and the focus from products to customer experience have made the already difficult task of calculating CLTV even more challenging.
To develop a robust customer valuation calculation that can inform marketing decisions for the long-term, CMOs need to work collaboratively with the CFO and finance function. By working hand-in-hand with finance, the CMO can ensure that their calculation is fiscally sound, considers the appropriate inputs, and is derived based on accurate and reliable data.
By working together to develop a robust and well-supported calculation for measuring and predicting CLTV, CMOs and CFOs will be in a better position to make decisions on the best places to invest to build profitable, long-lasting consumer relationships. Learn more about CLTV challenges and strategies here.