It might be a silly formula but it’s also a wrecking ball knocking down the pillars of the trading system| Trade β Blog
Defining Customer Equity Customer equity is the sum of all customer lifetime values for a firm. In other words, we calculate each customer’s lifetime value and we total all of these values together to determine customer equity. Customer equity, therefore, is the total expected profitability to be generated from a customer base over time.It is … Continue reading "What is Customer Equity?"| Customer Lifetime Value
Using CLV to determine Marketing ROI Let’s assume that: the average customer acquisition cost for a company is $100 the average annual profit for this customer cohort is $60 and the average customer lifetime is three years. The firm determines that the profit contribution is $180 before consideration of the initial acquisition cost (which means … Continue reading "Customer Lifetime Value (CLV) may be more appropriate than Marketing ROI"| Customer Lifetime Value
One of the major impacts on overall customer lifetime value (CLV) is the firm’s ability to retain customers. An increased loyalty rate can substantially increase the average lifetime period of the customer, resulting in a significant increase in customer lifetime value. However, it is unlikely that any cohort of customers will have a static retention … Continue reading "Customer retention rate should increase over time"| Customer Lifetime Value
Perhaps one of the confusing aspects of calculating customer lifetime value (CLV) is working out the average period that a customer purchases from the firm/brand. Sometimes it seems inconsistent with…| Customer Lifetime Value