Companies historically have used backward-looking metrics to attempt to understand which customers were worth investing in. As a metric, customer lifetime value (CLV) combines the probability of future customer activity to create a forward-looking metric that is more appropriate for deciding which customers to acquire, retain, or win back.

This paper:

  • Defines CLV.
  • Links CLV to Shareholder Value.
  • Discusses strategies for implementing CLV
  • Presents approaches to determine:
    • Which types of customers and future prospects to retain, grow, acquire, or win back (and which to not).
    • How much to spent on the various micro-segments to retain, grow, acquire, and win back these customers.
Key Insights:
  • CLV helps distinguish?profitably?loyal customers in the customer pool.
  • Success with managing through CLV lies in transforming a firm?s focus from product-centric to customer-centric marketing.
Download PDF

About the Authors

V. Kumar
V. Kumar (VK) is the Richard and Susan Lenny Distinguished Chair Professor of Marketing, and Executive Director, Center for Excellence in Brand & Customer Management, J. Mack Robinson College of Business, Georgia State University.
Show More

More Insights