Marketing Using ‘Customer Lifetime Value’ & ‘Customer Equity’

In the previous blog, customer profit was discussed which is relevant to the past tense of customer’s behaviour. Customer Lifetime Value (CLV) is concerned with “the present value of the future cash flows attributed to the customer relationship” (Bendle et al., 2016, p159).

Essentially, by gathering information about a customer’s behaviours we can reflect on the information and cash flows associated with the customer to provide an insight and estimation of the future value they might bring to the company.

Calculating CLV becomes extremely simple in contractual situations given the predetermined nature of the contract’s agreements but can provide a good element to planning for future cash flow.

The difference between CLV and Customer Equity (CE) is that CLV is concerned with a customer on an individual level while CE provides a measurement of the value of all customers (Bendle et al., 2016).

CE is another element that can increase the accuracy of financial standings and would, at the bare minimum, compliment the current processes in nearly any organisation.


Bendle, NT, PW Farris, PE Pfeifer & DJ Reibstein (2016) Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance, 3rd edition. Pearson: New Jersey


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