To help marketing measure the response of their activities, Customer Lifetime Value (CLV) is often used to determine the long term value of a customer. This considers their loyalty and potential to spend or cost more or less in the future. For many marketers, this may not seem that incredible, but if this number is calculated using accurate predictive models, it provides marketers with a single number by which they can measure everything they do. By analysing all the data available, this becomes the ultimate customer or prospect score and can be used to influence all decisions in an organisation without fear of decreasing value. It overcomes any short term gains, such as acquiring less valuable, or less loyal, customers in order to hit a customer quota.

Using CLV at the heart of all your marketing performance measures, enables marketing to focus on what they do best, which is creating and executing marketing activities and enabling sales to manage customers and prospects more effectively.

Marketing can progress beyond measuring clicks and conversion rates and focus more of what is creating real value. In addition CLV is a great enabler to change. For example if CLV is used to drive commission plans or determine individual retention investment, then you know the sales and marketing activity will be focussed on maximising sustainable long term customer value, as that is what advanced predictive CLV will be measuring.

Customer marketing is where CLV is most relevant. By considering all the available data to accurately measure CLV for each customer, it becomes very easy to measure and prioritise the impact of sales and marketing activities, as only one number needs to be tracked and this one number provides a realistic indication of future profit. CLV provides a common currency for all departments, including Sales, Marketing, Finance and Operations, to all measure and manage performance by.

Robust CLV analysis gives the CMO the ability to demonstrate true value creation, protect marketing budgets and ensure marketing spend is targeted most effectively.

Combining CLV & Lead Scoring

Imagine if we have account level CLV and contact level lead scoring. One multiplied by the other shows the predicted life time value of a specific lead. For B2B we know that CLV is based upon company need, which is fairly predictable, so using this to help qualify leads adds another, very significant, factor into our marketing qualification process. In reality, most companies already do this – but it is manually done by experienced account executives, and such knowledge and experience is rarely captured in usable data.

Unfortunately, the fragmented evolution of marketing has also stifled the effectiveness of this obvious approach. Marketing Automation tools were fundamentally built around the concept of a contact and not an account. This limits their ability to collect data, segment and score at the account level. Providing limited support for account based marketing campaigns.

Some solutions can provide account level lead scores by summing up or averaging the individual contact lead cores, but this is not ideal. More marketing teams are procuring account based firmographic data from 3rd parties, but this often complicates the data even more by adding additional data lists into the marketing database, adding more data, duplication and clutter, making marketing intelligence even harder to achieve.

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