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How can you align your digital transformation strategy with customer lifetime value?

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Digital transformation is not just about adopting new technologies, but also about creating value for your customers and your business. One way to measure and optimize this value is by using customer lifetime value (CLV), which is the total profit you expect to generate from a customer over their entire relationship with you. In this article, you will learn how to align your digital transformation strategy with CLV, and how to use it as a guiding principle for your digital initiatives.

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Ioannis Georgousis

Leading Change in Healthcare through Digital Solutions | MarTech | Innovation | Omnichannel Management | Product…
Bakhytzhan Zhakazhanov

CEO & Founder at Product Bee
Bruno Oliveira

?? Head of Digital Hub & E-Business SUMOL + COMPAL | ??Docente Marketing Digital e Inteligência Artificial Generativa…

1 What is CLV and why does it matter?

CLV is a metric that estimates how much a customer is worth to your business in the long term, based on their purchase history, loyalty, retention, and referrals. CLV helps you understand how much you can invest in acquiring and retaining customers, and how to segment and target them based on their value potential. CLV also helps you evaluate the impact of your digital transformation efforts on your customer relationships, and how to improve them over time.

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Bakhytzhan Zhakazhanov

CEO & Founder at Product Bee
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Focus on the Value Proposition: Highlight Benefits: Emphasize the benefits and value that your product, service, or idea brings to the audience. Clearly articulate how it addresses their needs or solves a problem. Positive Language: Use positive and affirmative language to create enthusiasm. Avoid negative phrases or apologetic tones.

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Mark Caswell-Yee

Fractional CMO, Growth Advisor, and Digital Marketing Expert
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Tracking and understanding CLTV is incredibly important. Many companies tend to put too much focus on Month on Month (MoM) revenue, making decisions that may give a temporary bump in revenue but hurt overall revenue in the long term. Instead, putting more focus on maximizing CLTV will drive consistent long term revenue growth in addition to an upward trend in MoM revenue.

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Sopan Khekade

Founder and CEO at Codexxa & Bizzware | Performance Marketing Expert | Helped E-commerce Businesses Scale from ?0 to ?16 CR in Just 1.5 Years ?? | Driving Results, Igniting Engagement ??
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Align digital transformation with customer lifetime value by prioritizing customer-centric initiatives. Leverage data analytics for personalized experiences. In my opinion, focus on enhancing customer journeys, ensuring long-term satisfaction and loyalty. Continuously adapt strategies based on customer feedback, fostering a sustainable and value-driven approach to digital transformation in marketing.

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Bruno Oliveira

?? Head of Digital Hub & E-Business SUMOL + COMPAL | ??Docente Marketing Digital e Inteligência Artificial Generativa | ?? +3.000 alunos | ?? Comunidade Digital de +1.900
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Customer Lifetime Value (CLV) is a metric that represents the total revenue a business can reasonably expect from a single customer account throughout their business relationship. It matters because it helps companies understand the long-term value of their customer relationships, rather than just short-term transactions.

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2 How to calculate CLV?

There are different methods and formulas to calculate CLV, but the simplest one is to multiply the average revenue per customer by the average number of purchases per customer by the average retention rate. For example, if your average customer spends $100 per year, buys from you four times per year, and stays with you for five years, their CLV is $100 x 4 x 5 = $2,000. You can also adjust this formula to include the cost of acquiring and serving customers, and the discount rate to account for the time value of money.

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Bruno Oliveira

?? Head of Digital Hub & E-Business SUMOL + COMPAL | ??Docente Marketing Digital e Inteligência Artificial Generativa | ?? +3.000 alunos | ?? Comunidade Digital de +1.900
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Here’s a basic formula to calculate it: 1.Average Purchase Value: Calculate this by dividing the company’s total revenue in a period by the number of purchases in that period. 2.Purchase Frequency: Find this by dividing the number of purchases by the number of unique customers who made purchases during that period. 3.Customer Value: Multiply the average purchase value by the purchase frequency. 4.Average Customer Lifespan: Estimate the average number of years a customer continues purchasing from your business. 5.CLV: Finally, multiply the customer value by the average customer lifespan. This gives you the Customer Lifetime Value. CLV = Average Purchase Value x Purchase Frequency x Average Customer Lifespan

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Mark Caswell-Yee

Fractional CMO, Growth Advisor, and Digital Marketing Expert
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There are significantly more complicated equations out there for estimating CLTV, but I’ve found that the suggested equation in this article is as accurate as any of them. I’ll sometimes make adjustments based on additional information but this equation is a great starting point. Also if you do not know what your average customer lifetime is, which is common with startups who haven’t been around long enough to see the users with high lifetimes churn, you can estimate it as 1/ChurnRate.

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3 How to align your digital transformation strategy with CLV?

To align your digital transformation strategy with CLV, you need to identify digital initiatives that can enhance the value of your customer segments, and prioritize them based on their expected return on investment (ROI). For instance, you can use digital tools and channels to increase the average revenue per customer through personalized recommendations, upselling and cross-selling, and loyalty programs. Additionally, you can improve the customer experience to increase the average number of purchases per customer, as well as build trust and satisfaction to increase the average retention rate. Furthermore, resolving issues and complaints quickly, as well as rewarding loyalty and referrals can also help to boost customer value.

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4 How to measure and optimize CLV?

To measure and optimize CLV, you need to track and analyze the key performance indicators (KPIs) that reflect the value of your customer segments and how they change over time. For instance, you can measure customer acquisition cost (CAC), customer retention rate (CRR), customer churn rate (CCR), customer satisfaction score (CSAT), and net promoter score (NPS). Additionally, tools such as customer feedback surveys, customer reviews, and social media analytics can provide qualitative insights into your customers' preferences, needs, and expectations. By comparing and correlating these metrics and insights, you can gain an understanding of the strengths and weaknesses of your digital transformation strategy. This will enable you to make adjustments to improve your CLV.

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5 How to communicate your digital transformation strategy with CLV?

To communicate your digital transformation strategy with CLV, you should use language and visuals that explain the benefits and value of your digital initiatives for customers and your business. Stories, case studies, data, charts, and testimonials can be used to illustrate how your digital transformation has improved the customer journey, increased loyalty and advocacy, reduced CAC, and boosted ROI. You can also use different channels and formats such as blogs, newsletters, webinars, podcasts, social media, and email to share insights on your progress and results, educate and engage your audience on the vision and goals of your digital transformation, interact with customers to encourage feedback and experiences.

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Ioannis Georgousis

Leading Change in Healthcare through Digital Solutions | MarTech | Innovation | Omnichannel Management | Product Marketing | PSPO |
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In my experience you need to prioritise data-driven personalization, streamlined processes, and customer-centric experiences. Showcase how these solutions maximize CLV by fostering loyalty, upselling opportunities, and efficient resource allocation. Illustrate a roadmap that aligns your transformation with measurable CLV growth.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can you align your digital transformation strategy with customer lifetime value?

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6

1 What is CLV and why does it matter?

2 How to calculate CLV?

3 How to align your digital transformation strategy with CLV?

4 How to measure and optimize CLV?

5 How to communicate your digital transformation strategy with CLV?

6 Here’s what else to consider

Digital Strategy

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How can you align your digital transformation strategy with customer lifetime value?

1

2

3

4

5

6

1 What is CLV and why does it matter?

2 How to calculate CLV?

3 How to align your digital transformation strategy with CLV?

4 How to measure and optimize CLV?

5 How to communicate your digital transformation strategy with CLV?

6 Here’s what else to consider

Digital Strategy

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