I Ask ChatGPT to Write an Article

I, perhaps like you, have gotten caught up in the viral interest generated by OpenAI’s generative AI chatbot, ChatGPT.?I composed a small test for ChatGPT as a personal investigation into its capabilities and a demonstration of its potential.?I chose a well-known concept in relationship marketing, the concept of customer lifetime value (CLV), about which I’ve written extensively, as a test subject.?I asked ChatGPT four questions (listed at the bottom of this article) to serve as prompting points.?My goal was to see how broad the chatbot’s ‘knowledge’ might be and to assess the chatbot’s ability to link the concept to marketing management practice.?Except for the subheadlines, which I've inserted, the following text is all ChatGPT's.

Brief Definition of CLV (Question 1)

Customer lifetime value (CLV) is a prediction of the net profit attributed to the entire future relationship with a customer. It is a key metric for evaluating the potential value of a customer to a business and is used to help make decisions about marketing investment, customer acquisition, and retention. CLV is calculated by multiplying the customer's expected purchases by their margin and subtracting the costs of serving the customer. By understanding a customer's CLV, a business can make more informed decisions about how to allocate resources to acquire and retain that customer.

Examples of How CLV Can Be Used (Question 2)

Here are a few examples of how a business might use customer lifetime value (CLV):

1. Marketing Investment: A business can use CLV to determine how much to spend on acquiring a new customer. For example, if the CLV of a customer is $1,000 and the cost of acquiring them is $100, it's likely that the acquisition is worth it.
2. Customer Segmentation: A business can use CLV to segment its customer base into high-value and low-value customers. It can then target its marketing efforts to the high-value customers, who are more likely to generate a positive return on investment.
3. Retention: A business can use CLV to identify customers who are at risk of leaving and then take steps to retain them. For example, if a customer's CLV is $1,000 but their recent purchase history suggests they're at risk of leaving, the business may offer them a loyalty program or special promotion to keep them engaged.
4. Product Development: A business can use CLV to identify which products or services are most popular among its high-value customers. It can then focus on developing or improving those products or services to increase revenue.
5. Customer Service: A business can use CLV to determine how much to invest in customer service. High-value customers are more likely to generate repeat business and positive word-of-mouth, so it may make sense to invest more in customer service for these customers.

Loyal Customers Are Valuable, Because… (Question 3)

Highly loyal customers can produce a number of business benefits for a company. Here are a few examples:

1. Repeat business: Highly loyal customers are more likely to make repeat purchases, which can generate a steady stream of revenue for a business.
2. Increased spending: Loyal customers tend to spend more over time, as they become more familiar and comfortable with a brand. This can lead to increased revenue and profitability.
3. Positive word-of-mouth: Highly loyal customers are more likely to recommend a company to others, which can generate new business and help to build the company's reputation.
4. Reduced marketing costs: Companies can save on marketing and advertising costs, as they don't need to spend as much to retain and acquire customers.
5. Increased customer lifetime value: Loyal customers are more valuable to a company over time. Companies can increase their CLV by retaining loyal customers, who spend more and generate positive word-of-mouth.
6. Insights into customer needs: loyal customers are more likely to give feedback and share their experiences with a company, providing valuable insights into what they want and need, allowing a business to improve its products and services.
7. Flexibility in pricing: loyal customers are less price sensitive, allowing a business to increase prices without losing them.
8. Reduced customer acquisition costs: loyal customers are more likely to refer others to the company, reducing the cost of acquiring new customers.

All of these benefits can help a company to increase revenue and profitability over time, making customer loyalty a key driver of business success.

Who Leads in the Use of CLV? (Question 4)

Many companies excel in the use of customer lifetime value (CLV) as a strategic concept, but here are a few examples of companies that are known for their effective use of CLV:

1. Amazon: Amazon has a reputation for being one of the best companies at using CLV to drive business decisions. They use data on customer purchasing history and behavior to personalize their marketing efforts, improve customer retention, and develop new products.
2. Netflix: Netflix is another company that effectively uses CLV to drive its business. They use customer data to recommend content, create personalized profiles and retain customers by keeping them engaged with personalized content.
3. Starbucks: Starbucks is known for its loyalty program, which is a great example of using CLV to drive customer retention. The program allows customers to earn rewards for repeat business, which helps to increase the value of each customer over time.
4. Apple: Apple is a company that excels in creating customer loyalty, which is a key aspect of CLV. They use a combination of innovative products, exceptional customer service, and a strong brand to create a loyal customer base that generates repeat business.
5. Zappos: Zappos, an online shoe and clothing retailer, is known for their exceptional customer service and use of CLV. They use customer data to personalize their marketing efforts, improve customer retention, and develop new products. They also have a strong return policy to encourage customers to make purchases with confidence.

These are just a few examples of companies that have been recognized for their use of CLV. There are many other companies that also excel in this area and use CLV to drive their business strategies.

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My Observations:

This article, for illustration purposes, was authored in its entirety by ChatGPT.?All content came from ChatGPT.?I am impressed with the accuracy of the response and the breadth of the exhibited ‘understanding’ of the concept.?Where ChatGPT got its grasp of the concept of CLV and the described insights from is a much trickier question.?OpenAI has reportedly claimed that ChatGPT doesn't have [direct] access to the internet.?Its 'knowledge' has been accumulated through 'training sessions' with human trainers.?However, given the range of the information ChatGPT demonstrates 'knowing', it's hard to consider it totally isolated from the internet.?Claiming isolation may be a way of forestalling infringement claims of copyright ownership.?Even trickier are the ultimate questions, related to future ChatGPT responses, concerning the accuracy and morality of the information ChatGPT dispenses.?This is a possible ‘stumbling point’ for OpenAI which has already encountered some problems attempting to train the bot to distinguish ‘toxic material’ (content oriented toward sexism, racism, and violence) and thereby to avoid perpetuating or seemingly approving it in its dialogue.

Notwithstanding these potential problems, it’s fascinating to observe the ‘knowledge’ available to this generative AI chatbot and its ability to respond in a very humanlike fashion!?If you’re familiar with CLV, I trust you’ll be as impressed with ChatGPT’s responses as I am.?For your review, the four questions I asked ChatGPT to elicit this description of CLV were the following.?Their numbers coincide with the numbers in each subhead above.

Questions asked of ChatGPT to conduct this evaluation.

1. Explain the strategic concept of "customer lifetime value" for marketing professionals.
2. Give me some examples of how "customer lifetime value" can be used.
3. What are some specific business benefits produced by highly loyal customers?
4. What companies excel in the use of "customer lifetime value”?