CLV tutorial
MARKETING ENGINEERING FOR EXCEL
TUTORIAL
VERSION v130522
Tutorial
Customer Lifetime Value
Marketing Engineering for Excel is a Microsoft Excel add-in. The software runs from within Microsoft Excel and only with data contained in an Excel spreadsheet.
After installing the software, simply open Microsoft Excel. A new menu appears, called “MEXL.” This tutorial refers to the “MEXL/Customer Lifetime Value” submenu. Overview
Customer Lifetime Value (CLV) represents a metric of a customer's value to the organization over the entire span of that customer’s relationship with a firm. Short-term sales influence CLV, but so do overall customer satisfaction, the churn rate in the segment, and the costs to acquire a new customer and retain an existing customer.
The CLV approach helps firms answer such questions as:
How much is my customer base "worth"?
Taking into account observed churn rates, how many of the currently active customers will still be active in a few years?
How much is a customer worth, depending on the segment to which he or she belongs?
If acquiring a new customer costs $150, after how many periods can we recoup this investment?
Customer lifetime value analysis considers your database at a segment level, using the answers you provide to the following questions:
How many segments do you have in your database, and how many customers per segment?
For a given period, how much is a customer worth, on average, in each segment (margins and costs)?
What is the likelihood that a customer in segment A will switch to segment B during the next period?
CUSTOMER LIFETIME VALUE – V130522
1/10
Getting Started
A CLV analysis allows you to use your own data directly or a template preformatted by the MEXL software.
The next section explains how to create an easy-to-use template to enter your own data. If you want to run a CLV analysis immediately, open the example
TUTORIAL
VERSION v130522
Tutorial
Customer Lifetime Value
Marketing Engineering for Excel is a Microsoft Excel add-in. The software runs from within Microsoft Excel and only with data contained in an Excel spreadsheet.
After installing the software, simply open Microsoft Excel. A new menu appears, called “MEXL.” This tutorial refers to the “MEXL/Customer Lifetime Value” submenu. Overview
Customer Lifetime Value (CLV) represents a metric of a customer's value to the organization over the entire span of that customer’s relationship with a firm. Short-term sales influence CLV, but so do overall customer satisfaction, the churn rate in the segment, and the costs to acquire a new customer and retain an existing customer.
The CLV approach helps firms answer such questions as:
How much is my customer base "worth"?
Taking into account observed churn rates, how many of the currently active customers will still be active in a few years?
How much is a customer worth, depending on the segment to which he or she belongs?
If acquiring a new customer costs $150, after how many periods can we recoup this investment?
Customer lifetime value analysis considers your database at a segment level, using the answers you provide to the following questions:
How many segments do you have in your database, and how many customers per segment?
For a given period, how much is a customer worth, on average, in each segment (margins and costs)?
What is the likelihood that a customer in segment A will switch to segment B during the next period?
CUSTOMER LIFETIME VALUE – V130522
1/10
Getting Started
A CLV analysis allows you to use your own data directly or a template preformatted by the MEXL software.
The next section explains how to create an easy-to-use template to enter your own data. If you want to run a CLV analysis immediately, open the example