Customer Lifetime Value

Understand and Increase Long-Term Customer Value

With E-Nor’s Advanced Analysis capabilities, we can work with you to identify your highest-lifetime value customers and generate even greater return from this most valuable segment of your customers.

The Pareto Principle states that, for many events, roughly 80% of the effects come from 20% of the causes. The same is likely true for your marketing efforts: 80% of revenue can be attributed to 20% of your customers.

Problem

The client’s marketing team felt stuck. Revenue growth was flat quarter over quarter despite releasing two new, critically acclaimed products and running several cost-and-labor-intensive acquisition marketing campaigns.

The marketers were unsure who their most valuable, loyal customers were, how they acquired them, where they came from and, most importantly, how to acquire more of them.

The marketing team wanted to advocate for an increase in the advertising spend budget to meet their annual revenue goals, and they knew they needed to present a solid business case to obtain the increase they desired.

Approach

E-Nor performed a thorough discovery by reviewing the client’s marketing strategy, marketing measurement model, data analytics infrastructure, and reporting workflows. We then executed an exploratory data analysis (EDA) and performed a historical Customer Lifetime Value analysis based on Google Analytics, DoubleClick Campaign Manager, email marketing and transactional data sources. Once the historical analysis was completed and shared with stakeholders, E-Nor then moved into the predictive modelling stage. We selected and tested machine learning algorithms to predict the lifetime value of newly acquired customers. E-Nor then provided:

  • Automated visualizations in Tableau for the marketing team and executives
  • Automated exports of customer-level data for use in email campaigns
  • Documentation of methodology and all source code used

Solution

  • A Historical Customer Lifetime Value Analysis to create customer segments by lifetime value, acquisition source, first product purchased, demographics, and other key dimensions/segments.
  • A Predictive Customer Lifetime Value Analysis to use historical data to predict the expected LTV of customer segments by acquisition source, demographics, and other key dimensions/segments.
  • Data infrastructure (data ETL, visualizations) for automated CLV reporting and customer level exports for retention and acquisition marketing.

Application

Retention – Email

  • offer high-value customers loyalty discounts, early access to info, pre-order discounts,
  • reach out to mid-value customers with personalized content (e.g. – “complete the product set”)
  • reactivate “lost” customers with “winback” campaigns (e.g. – discounts in exchange for surveys, discounts )

Acquisition – Paid Search

  • optimize campaigns, ad-groups and keywords based on LTV segments from historical and predictive modeling

Results

  • Incremental revenue from repeat customers attributed to new email campaigns and LTV segments
  • Improvement in expected 1 year CLV, attributed to paid search campaign optimizations based on LTV analysis recommendations
  • Access to previously unavailable LTV KPI’s and reporting
  • Improved productivity from removal of manual reporting, visualization and analysis workflows

Evolution of CLV analysis and the incremental business value gained from each phase.

Use advanced analysis to identify and cultivate your top 20%.

Optimization for Maximum Value: Improve marketing ROI in the long-term by optimizing ad spend for maximum value instead of minimum cost.

Retention: Focus on retaining and deepening the relationships with your best customers.

Increased Repeat Customer Revenue: Increase profit margins OR increase customer retention rate and repeat customer revenue by re-allocating marketing spend. Identify and focus on increasing revenue from highest-value, “All Star” customers.

Personalization for LTV: Improve customer experience through onsite and mobile app personalization based on Customer Lifetime Value.

Churn: Identify why your low lifetime value customers churn by first identifying your “lost” customers, then digging deeper with market research groups and A/B testing to identify ways to improve their experiences.

Are you ready to shift your customer acquisition focus from “how can I minimize my cost?” to “how can I optimize my acquisition spending for maximum value?”

Do you want to grow your business by understanding who your best customers are and how to get more of them for less?

Reach out to E-Nor to discuss an advanced Customer Lifetime Value solution for your organization.