Explain the customer lifetime value (CLV) concept
Explain the customer lifetime value (CLV) concept. Thinking about a specific firm, how could it use the concept of CLV to increase the overall profitability of its customer base?
Customer Life Value concept is seeing how much a customer spends over three to five year time span, and providing marketing and advertisement to categories of consumers, and what there interests and budgets are because advertising the same thing to mass population is not as productive and wont generate as large or a revenue like CLV will. Consumers want to feel that a company can advertise to what they want, and feel that company is taking the time to help them make a sales decision based on their lives and finances. A good example of CLV is amazon because each member has to sign up for an account and that account tracks what those consumers buy. Over a three to five year period amazon can make recommendations to those consumers from what they buy to what is popular with each demographic group because all sales are tracked and addresses are always up to date in their system.