Leverage Customer Lifetime Value to Crush Your Competition

Hey Folks. My name is Charles Lumpkin. Today I want to talk to you about Customer Lifetime Value. Or as us insane marketers call it CLTV for short. CLTV is a very important concept to understand. I’m going to shoehorn as much as I can in about two minutes here.

You can think of CLTV as a series of payments. Any particular customer – you are going to get your first time purchase. If you are a retailer, oftentimes, you’ll have programs, like email and such, that will ensure that you get some purchase on down the line from at least a subsegment of those customers.

So outside of that first purchase you have some value that is being extracted from your customer base over a period of time. From a lead gen or subscription site perspective. You need to figure out what schedule of payments is. You are going to take that and shoehorn it back into your acquisition. Now here is where the big boys get big. This is an important thing to understand. You can take that CLTV and leverage it to acquire new customers.

Where you’ve got competitors out there who are just able to monetize and acquire customers on that single first purchase. Even if you have equivalent margins and you have CLTV and they don’t. You can leverage part of your CLTV. Not the whole thing – you need to make some profit. You can leverage that to acquire new customers. If you are gonna pull it back all the way to the actual bid and how much you can afford to pay for person, you need to take the present value of those future payments into today. Add that value to the first purchase – then you’ll have a complete picture of customer lifetime value and it will help you dominate your competitors.

My name is Charles Lumpkin. You can find me at CharlesLumpkin.com. Thanks for your time.

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