It’s a given that your customers are valuable to your company. But do you know what their lifetime value is?
Customer Lifetime Value (CLV) is one of the most important metrics when it comes to understanding and retaining your existing customers. It enables businesses to understand the total value a consumer brings throughout their lifetime, providing companies with a metric to measure and evaluate campaign performance and marketing budgets.
But new research by Criteo has found that over three quarters (76%) of businesses in the UK are unable to effectively measure CLV.
According to The State of Customer Lifetime Value report, the overwhelming majority (98%) of marketers surveyed believe CLV is important to their marketing strategy. It is perhaps not surprising, then, that 93% of organisations are trying to measure CLV. However, nearly seven in 10 (69%) know there are improvements to be made. Meanwhile, less than a quarter (24%) felt they were effectively able to monitor CLV.
It’s not hard to see why organisations want to adopt this metric. The majority (81%) of marketers agree monitoring CLV results in a sales boost. Other benefits include increases in customer retention (68%), and enhanced brand loyalty (56%).
Certainly, those who are effectively measuring CLV are reaping the rewards, with 81% seeing more sales compared to 57% of those who are struggling to monitor this aspect. Additionally, effective measurement has enabled over three quarters (79%) to implement more timely marketing. This is in comparison to the 29% not monitoring this area.
Obstacles hampering CLV adoption
While there are clear benefits to monitoring CLV, businesses are facing barriers when it comes to adoption. More than a third (36%) said it was too expensive to monitor, 26% felt they lack the in-house skills, and less than a quarter (24%) said it was too complicated to monitor and that they were unable to implement the insights gained from the CLV data they collect.
And even those businesses that have adopted CLV are facing obstacles. Of those monitoring it, a staggering 95% believe their ability to increase the accuracy or impact of CLV is being held back by at least one factor.
The biggest barriers were: a competitive marketplace (52%); tracking customer across devices (45%); customers being signed out or guest users (41%); an inability to measure CLV (37%); poor systems or a lack of integration (31%); a lack of senior buy-in (17%); and other departments failing to see CLV as a priority (10%).
So, how can businesses boost CLV? Improved data usage (72%), better customer insight (57%), and improved brand reputation (55%) are the key areas marketers believe will increase the practice of CLV measurement in the future.
Your customers are your company’s biggest asset. You need to understand your customers and their value in order to increase the effectiveness of your marketing and boost customer retention, loyalty, and overall brand relationships. See how Fireworx can help your marketing make an impact — give us a call today.