1. To manage and predict future growth as well as the profitability of a company it must understand its customers and its relationship with them. To understand this relationship and to put figures against it different metrics could be used in businesses.
Companies use the metrics such as customer life time value (CLV) to understand the importance of a certain type of customer towards the business and give a greater insight of the expected future revenue as well as expenses.
CLV is the expected revenue from a customer over the course of the relationship with the customer and the company. Upon the calculation of CLV, many different factors need to be taken into consideration. Such as, contract length (how long a customer is with the company), …show more content…
The calculations shows that it is a no brainer that what type of customers that should concentrate on.
2. When the following approach such as, enhancing customer loyalty, growing income/revenue per customer, enhancing customer loyalty and reducing acquisition cost is looked into that will impact CLV, the greatest approach would be enhancing customer loyalty and reducing acquisition cost.
The saying “make new friends, but keep the old. One is silver, the other is gold”. This saying relates to businesses as well. A long term customer is of more value (gold) than a single buyer customer (silver) and it is more expensive to require new customers rather than keeping an existing one. It does not mean that business should not get new customers, it means if businesses keep a larger percentage of existing customers for a longer period, the company builds on a revenue foundation that is more profitable and easier to …show more content…
Retaining customers is essential in maintaining customer loyalty.
Loyalty programs for customers increase customer lifetime value by the increase in visits, increase in the amount spent per visit and as well as winning back lost customers.
Keeping customers loyal and helping to impact spending decisions are strong factors why loyalty programs are influential to customers, important, and beneficial for business to have. It is also the key for the growth of the business.
It is heard by many entrepreneurs, marketing gurus etc. that it is 5-10 time costlier to get new customers than to retain an existing one. Increasing customer retention will increase the profit of the company.
Although, enhancing customer loyalty will have an impact in CLV so does reducing acquisition costs. Acquisition cost is the simply the price you pay or the cost you incur to acquire a new customer. It doesn’t matter how valuable a customer might be if the customer cannot be acquire
Companies use the metrics such as customer life time value (CLV) to understand the importance of a certain type of customer towards the business and give a greater insight of the expected future revenue as well as expenses.
CLV is the expected revenue from a customer over the course of the relationship with the customer and the company. Upon the calculation of CLV, many different factors need to be taken into consideration. Such as, contract length (how long a customer is with the company), …show more content…
The calculations shows that it is a no brainer that what type of customers that should concentrate on.
2. When the following approach such as, enhancing customer loyalty, growing income/revenue per customer, enhancing customer loyalty and reducing acquisition cost is looked into that will impact CLV, the greatest approach would be enhancing customer loyalty and reducing acquisition cost.
The saying “make new friends, but keep the old. One is silver, the other is gold”. This saying relates to businesses as well. A long term customer is of more value (gold) than a single buyer customer (silver) and it is more expensive to require new customers rather than keeping an existing one. It does not mean that business should not get new customers, it means if businesses keep a larger percentage of existing customers for a longer period, the company builds on a revenue foundation that is more profitable and easier to …show more content…
Retaining customers is essential in maintaining customer loyalty.
Loyalty programs for customers increase customer lifetime value by the increase in visits, increase in the amount spent per visit and as well as winning back lost customers.
Keeping customers loyal and helping to impact spending decisions are strong factors why loyalty programs are influential to customers, important, and beneficial for business to have. It is also the key for the growth of the business.
It is heard by many entrepreneurs, marketing gurus etc. that it is 5-10 time costlier to get new customers than to retain an existing one. Increasing customer retention will increase the profit of the company.
Although, enhancing customer loyalty will have an impact in CLV so does reducing acquisition costs. Acquisition cost is the simply the price you pay or the cost you incur to acquire a new customer. It doesn’t matter how valuable a customer might be if the customer cannot be acquire