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LATEST NEWS / 03 - 07 - 2024
Lifetime Value Methodology: How to Maximize Your Customer Value
Tired of getting customers who never come back? After decades of focusing primarily on acquisition marketing, the market is changing. The best-run companies know it's time to change direction. And it's time to introduce you to our Lifetime Value Methodology!
Lifetime Value Methodology: How to Maximize Your Customer Value

Go from one-time buyers to lifelong customers. From clicks to relationships. From just the top of the funnel to the entire customer journey.


What is Lifetime Value Methodology - What Does It Offer You?

In short, Wizard's Lifetime Value Methodology is about Finding the Ideal Customer Profile (ICP). In essence, using RFM (Recency, Frequency, Monetary) analysis and segmentation, you can identify the ideal customer profile for your business. This approach enables you to understand which customers are most valuable and why.


However, we don't just stay here!


This method helps us, among others, to optimize the Customer Journey Map. We improve your customer experience by focusing your efforts on ICPs. In other words, we create a Customer Journey Map that reflects the needs and expectations of your customers and identifies any weak points that may exist, effectively improving interactions at all touch points.


Also, the Detection of Toxic Products and Anomalies in the Markets, is a main issue of solving the Lifetime Value Methodology. You will discover the toxic products that are causing customer dissatisfaction so you can remove them from your business. We analyze your customers' shopping habits to identify anomalies and optimize your product assortment.


Next step?


The Focus on ICP Customer Acquisition. We shift the focus of customer acquisition to ICPs, running continuous optimization through A/B testing across cohorts to see which strategies are most effective.


And finally, Omnichannel Campaign Personalization is a must. We organize ongoing personalized campaigns in all available channels: email, ads, website and more, and through the use of customer data, we create the most targeted campaigns that meet the real needs and expectations of your ICPs.


With these strategies, we can create a more efficient and profitable relationship for your customers as well, maximizing Customer Lifetime Value and improving the overall success of your business. Contact us!


How is it measured?

What are the key KPIs we use?


Retention: The percentage of customers who continue to buy from your company over time.
NPS (Net Promoter Score): A measure of your customer satisfaction and loyalty.
CES (Customer Effort Score): The effort required by customers to solve problems or complete a purchase.
ADBT (Average Days Between Transactions): The average time between your customers' purchases.
OpC (Orders per Customer): The number of orders per customer.
2nd Month Cohort Stickiness: The percentage of customers who remain active after the second month.

Case Study - How did we implement it?

Under the Lifetime Value Methodology, we applied our effective strategy to a popular and much-loved brand. Let's see the full methodology in detail:

Goals

  • Customer Lifetime Value = +50% (YoY)
  • Retention Rate = +20% (YoY)
  • Revenue = To achieve the same revenue with -40% Paid Ads Spending

The goal was to analyze RFM, with data from the last four years and categorize our customers based on Revenue per Customer & Purchase Frequency, to create an RFM Score Mapping.

Implementation

So we implemented an RFM Group to customers in:

  • Lovers: €488 Revenue per Customer
  • Ex Lovers: €285 Revenue per Customer
  • About to Dump You VIP: 476€ Revenue per Customer
  • New Passion: €137 Revenue per Customer
  • About to Dump You: €99 Revenue per Customer
  • Platonic Friend: €35 Revenue per Customer

For the best understanding of segmentation, below is the etymology of RFM Group:

  • Lovers: Active, with sufficient number or value of orders.
  • Ex Lovers: Former loyal customers, who have stopped buying.
  • New Passion: They have placed their second order, with a high value.
  • About to Dump You: Relatively inactive, last order 6 months ago.
  • Platonic Friend: Active, with moderate number of orders and value.

We implemented RFM Score Mapping and joined the categories with the highest Revenue per Customer (Lovers, Ex Lovers) creating a targeted audience of 10,000 customers.


Then, we created Campaigns with personalized words, banners, videos in Meta & Google Ads and activated Loyalty Coupons and Email Marketing actions.

Results

The results certainly speak for themselves! Specifically for the above action we achieved:

  • Customer Lifetime Value = +81%
  • Retention Rate = +100%
  • Revenue Growth = +23% with -40% Paid Ads Spending

With these customer-tailored strategies, we have been able to increase Customer Lifetime Value and significantly improve sustainable business success.


Rethink how your company defines "success" and show the true value of the customer relationship. Apply the Lifetime Value Methodology with us to turn one-way buyers into loyal friends and unlock the potential of every interaction.


Make everyone understand the true meaning of CLV: it's not just a performance indicator for marketing, but a comprehensive measure of success for the entire business.


Next step!

Alexandros Kokolis Avatar
WRITTEN BY
Alexandros Kokolis
DATE POSTED
03 - 07 - 2024.
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