Optimizing Customer Based Initiatives

It's important to allocate resources to maximize impact and return on investment, and managing customer based initiatives optimally allows for that.

That's where the customer equity test, balancing marketing budgets between customer acquisition and customer retention efforts. Managing customers for three different outcomes: maximizing revenue in the near term, short to intermediate term and optimizing the asset value of customer relationships over the long term. Customer equity describes the effectiveness of customer strategies and implementation because it is primarily determined by the total value of the enterprise's customer relationships. 

A sole focus on short-term profit is a recipe for destruction because sales personnel are worried only about short term milestones not meeting long-term strategy. It's about increasing the profitability of current customers and the likelihood of turning prospects into customers. 

Return on Customer is a metric designed to measure the efficiency with which value is created from the available customers.  ROC needs an integrated segmentation study with multiple dimensions, a related attribution (churn) study, and a detailed LTV analysis.

Leading LTV predictors fall into four categories:

  1. Lifetime value drivers
  2. Lifestyle changes
  3. Behavioural cues
  4. Customer attitudes 

Understanding where your customer is in life and the product lifecycle, how they use your product and services and their attitudes towards technology or new process can help better manage your customers. 

Check out the below infographics on how Starbucks 

LTV of a customer_Starbucks

Now you know the details in LTV the following is information on the impact of keeping customers. 

customer retention

Remember that customers are your bread and butter in a business and without customers you have no business. Treat them right and understand where certain customers fit so you can serve them better and have a thriving business!