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    What is Customer Lifetime Value?

    Afton Brazzoni | Industry Analysis | 15th April 2021
    What is Customer Lifetime Value?

    It’s imperative for all media organizations to be able to identify and prioritize their most valuable customers in terms of both audiences and advertisers. While technology solutions such as customer data platforms can help you gain a deep understanding of your audience, the customer lifetime value (CLV) metric takes this insight to another level.

    In this article, we’ll define CLV and discuss how keeping an eye on this metric can benefit publishers. We’ll also explore two other related industry terms: single customer view and total customer value. Grab your notebook!

    Defining customer lifetime value - and why it matters

    CLV is derived from a customer’s total spend on your products or services over the course of their entire relationship with your media company. Considering that retaining current customers can result in a profit increase of up to 95%, it’s beneficial to know which of your subscribers and advertisers have a high CLV. This way, you can ensure you’re delivering high quality, personalized content, ads, and media buy options regularly.

    Over three quarters of businesses consider CLV an important metric to track—a solid endorsement in our books. Here’s a simple way to calculate it:

    CLV = [Average Transaction Value] x [Number of Transactions] x [Average Length of Customer Relationship]

    Measuring your CLV regularly is an excellent way to check in on how your products and services are resonating with your customers, and whether there are any areas you can improve upon to increase retention, as well as to win more new business. Impress your subscribers and advertisers enough, and they may just spread the word to others in their network.

    However, if you find your average CLV is low or has started to decline, it may be time to invest in a technology solution that will enable you to segment your user database and better monetize your audience by creating personalized customer nurture journeys. 

    “One of the most important tactics to improve customer lifetime value is to re-engage customers who have had a previous experience with the brand. Retargeting can be a simple reminder of the company and, at the very least, increase brand recognition,” according to this article by CleverTap.

    Subscription software like Lineup Systems’ Amplio allows you to retarget customers—among many other functions—with insightful data that helps you develop offers with built-in automation for specific audience segments. This kind of modern subscription management is critical to future proofing your media organization and reducing your subscriber churn rate.

    What is single customer view?

    Now that we’ve covered the basics of CLV, let’s dig into one of the foundational elements of calculating it, which involves establishing a single customer view (SCV). Organizing all of your company’s customer data into one central representation—your SCV—is a helpful stepping stone on the way to determining your CLV. Still with us? Good.

    It’s well known in the media industry that siloed data scattered across multiple departments poses a challenge for organizations. More than 50% of publishers say disparate data causes them a “major” or “moderate” headache when it comes to increasing their subscription revenue. This is why investing in the technology required to develop an SCV is so important.

    “By consolidating every piece of information about your users in one centralized location, you get a powerful overview of every action they performed—on their mobiles, on your website, or even in your offline store,” according to this article by Piwik PRO.

    Lineup Systems’ Amplio solution provides publishers with an SCV, enabling them to see all of their users’ history with each of their media properties and create models to help predict future customer behavior. In addition, the software offers the capability to set up groups of users with similar attributes for audience targeting purposes—all with the aim to grow your bottom line.

    What is total customer value?

    We’ve discussed in depth how you can make the most out of your customer data to drive subscription and advertising revenue. However, successful customer relationships go two ways, which is why it’s time to turn your attention to what your customers get from your media company’s product or service. This is known as total customer value (TCV), which also impacts your CLV.

    “[Total] customer value measures a product or service's worth and compares it to its possible alternatives. This determines whether the customer feels like they received enough value for the price they paid for the product/service,” according to this article by HubSpot. Here’s how to calculate it:

    TCV = [Total Customer Benefits] - [Total Customer Costs]

    The greater the value your customers get from your media organization’s offerings, the longer they’re likely to continue doing business with you and the more they’re likely to spend, which can increase your CLV. Beyond driving brand loyalty, it’s simply smart business practice to ensure your customers are getting the most value possible from their purchases to establish your reputation as a leader in the publishing industry.

    Strengthen your subscription ecosystem

    With Lineup Systems’ Amplio subscription management platform, you can create targeted offers for your most engaged audience members, and increase time spent on your website as well as conversions. Decrease subscriber churn and drive renewals with one seamless solution. Find out more about how Amplio can work for you.

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