The Customer Centricity mantra has permeated almost every business today. But what does it mean to be truly customer centric? True customer centric firms realize two things: first, customers, and not capital, is the scarcest resource you have as a business, and second, not all customers are created equal.
Customer centric companies embrace these facts and focus on making business decisions not on the basis of ROI, but ROC (return on customer). ROC recognizes that the only value you create as a business is customer lifetime value (CLV), and increasing CLV is the only thing that really counts. Recently, in conjunction with the DMA Analytics Council I conducted a webinar on using CLV to make smarter business decisions.
The reason I did this is because computing CLV can be an elusive concept that is often wrongly applied. To be successful with it and move further down the path to becoming more customer centric, you have to keep five fundamental tenets in mind:
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CLV is forward looking, not backward
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CLV has to embrace heterogeneity and be calculated at the individual customer or segment level, not at the aggregate level
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CLV is a prediction, it is not precise
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One needs to calculate both actual, and potential CLV
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What really matters is incremental CLV, not absolute CLV
Listen to this webinar replay and find out how you can implement this concept in your company. Also, if you have any questions or would like to further discuss CLV, feel free to email me at nsirohi@iknowtion.com.
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