Robert Johnson

Expert Series: Exploiting CLV (customer lifetime value), the Key is Good Data

Customer preferences are rapidly shifting in most industries. For example, Michael Kors Holdings, Ltd. recently blamed lower quarterly revenues on missing an upswing in demand for logo’d handbags. The company had expected demand for those types of handbags to continue downward.

To get a better handle of customer preferences, companies need lots a data and a way to turn that data into insight. Fortunately, companies have lots of customer data, but it’s usually product-centric and scattered across their enterprise in various databases. Furthermore, many haven’t chosen a good metric for useful customer insights. I suggest that companies consider adopting the Customer Lifetime Value (CLV) for that metric.

CLV sheds light on overall profit per customer and future revenues. Amazon used CLV data to identify its best customers and introduce their Amazon Prime membership program which currently boasts over 100 million members.

Other companies are using CLV data to lower customer acquisition costs. Crocs used CLV data to reduce reliance on sales promotions and discounts to increase revenue.

The question for many is how to get started. I recommend the following:

  • Establish a cross-functional team including marketing, operations, finance, IT and other key functions since all departments will be contributing to success
  • Examine data centered on customers versus product line. It’s likely customer-centric data will uncover hidden buyer interests which can generate cross-selling opportunities for other product lines
  • Execute targeted marketing and sales campaigns based on insights gleaned from this effort

IT plays a pivotal role with this effort as the guardians of the data and as experts on how to helping their colleagues visualize the data using tools to unlock critical insights. This will enhance IT’s reputation and display the benefits of investing in technology.

Executing an initiative to better understand customer preferences and buying actions will accelerate revenues and reduce cost of sales. Using CLV is a definite winner!

Robert Johnson, is an experienced strategist, marketeer, author, educator and consultant. He is the founder and principal of Bennett Frank Associates, a consultancy dedicated to helping technology companies target the right products at the right customers to accelerate growth and increase profits. He can be reached at