Understanding Customer Lifetime Value

Understanding the future value of repeat customers is considered as the consumer lifetime value (CLV) and is calculated through an heuristic algorithm (Calciu, & Salerno, 2002). A calculation of the linear relationship between repeat customers and the business can be found in an algorithm (Calciu, & Salerno, 2002). CLV is respected as a cash value for the firm- based on present value of forecast revenues from consumer sales (Calciu, & Salerno, 2002). To determine the consumer lifetime value and all of its promise means optimizing on the potential to capture new clients, and retain both new and old customers (Calciu, & Salerno, 2002). Two concepts both; retention & migration model's, uses CLV, along with buying probability, and prospect value in an algorithm as the predictive analytic technique (Calciu, & Salerno, 2002). Furthermore a combination of the two models reveals opportunity to optimize earning through CLV (Calciu, & Salerno, 2002). Customer lifetime value shows a return on investment for capital used in marketing mix. The progressive convergent of the two models show the importance for looking beyond the customer lifetime value unto supply, and opportunity to capture more lifetime customers. The lack of depth comes from a shallow look of net present value for the lifetime customer. Of course we share assumptions with the entire market that all the relevant information is present concerning the product in the efficient consumer market. Reference Calciu, M., & Salerno, F. (2002). Customer value modelling: Synthesis and extension proposals. Journal Of Targeting, Measurement & Analysis For Marketing, 11(2), 124.