Lifetime value
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In marketing, the Lifetime Value (LTV) of a customer is the present value (usually expressed in currency) of future profits that can be derived from a customer based on the profits have been received from that customer in the past.
Although individual LTV calculation vary, the calculations are usually based on several factors:
- Recency - How recent were the profits gained from this customer?
- Frequency - How often have we done business with this customer?
- Volume - How much total has been derived from this customer?
By analyzing LTV, a company gets an accurate projection of the value of keeping customers loyal. This provides a basis for the return on investment of customer service systems.
[edit] See also
[edit] References
- The One to One Future: Building Relationship One Customer at a Time by Don Peppers and Martha Rogers, Ph.D. page 36
- Enterprise One to One: Tools for Competing in the Interactive Age by Don Peppers and Martha Rogers, Ph.D.
- The New Direct Marketing: How to Implement a Pofit-Driven Database and Marketing Strategy by David Shepard Associates Irwin Professional Publishing, 1995
