Benefits of LTV analysis
Knowing your customer LTV is important for several reasons.
Many of these items are similar to what is listed already on 108.20.10 Data Analysis - Optimize.
- Tell you what an individual customer is worth
- Allow you to estimate the value of your company's overall customer equity
Segmentation opportunities with LTV?
- Enable the company to divide customers into tangible segments (Related to 18.104.22.168.20.10 Data Analysis - Segments - RFM), separating the most valuable and committed customers into different groups and distinguishing them from the less valuable but numerous others
- Create opportunities to help you refine marketing practices and ensure the right approaches are being made to the right customers
- Allow you to better predict how certain customers in certain situations might act going forward
- Ensure that resources are used more efficiently in efforts to retain and develop existing customers and acquire new ones
!!!! What is the difference between segmentation using RFM and segmentation using LTV? For RFM it makes sense because it can be a 2D plot. For LTV it would only be a sliding scale, and newer customers who might be better won't have had enough time to build a high LTV
1. https://s3.amazonaws.com/kw-wdp/epubs/20150912-WDP-Fader-CustomerCentricity_Chapter4_CourseraCustomerAnalytics001.pdf - Chapter 4, page 77