CLV stands for Customer Lifetime Value.
You may encounter different variations of this term like lifetime customer value (LCV), or life-time value (LTV).
But they all mean the same – it’s the amount of money one customer is expected to bring to you business.
It’s one of the most important metrics in business as it dictates the strategy of customer acquisition and the amount of money you can spend to get new customers.
Today we’re going to test how well you understand CLV and the ways of maximizing it.
How is CLV calculated?
CLV is the combination of your profit per order (Average Order Value, Gross Margin), how often that happens (Purchase Frequency) and how long you relationship with your customer lasts (Customer Lifetime Period)
What’s the unobvious reason why CLV is important?
Segmentation means personalization. And that’s something that’s expected today. By splitting your customers into groups you can adopt different marketing strategies e.g. slowly upselling for low value clients, offer high ticket products for VIPs.
What’s the best way out of the listed below to increase Average Order Value?
To increase the order value we need to make your customers spend more. How do we do that so it’s beneficial both for us and them? Bundling is the right answer!
What’s the best way out of the listed below to increase Purchase Frequency?
Purchase frequency is all about getting your customers back to your store, that’s why it’s important to remind them to make new purchases in a personalized timely manner.
What’s the most efficient way to increase Gross Margin?
Adjusting the price to maximize the profits is the easiest solution. You don’t have to add new products and make changes in the business process. All it takes is some testing.