When
you are calculating the ROI of your print, email, or multichannel marketing
campaign, how long a view do you take? Do you stop tracking revenue after a
month? One year? What about the lifetime of the customer?
Lifetime
customer value (LCV) is an overlooked metric that should be part of how
marketers measure success. Customers gained through personalized printing
campaigns, in particular, tend not just to purchase more, but to be more loyal
than customers acquired through traditional methods. Thus, real ROI should
include recurring revenue as well as the immediate revenue generated.
How
do you determine LCV? There are a variety of factors to consider:
• Churn rate: How often do customers leave
your customer base?
• Retention cost: How much does it cost you
to support, bill, and incentivize your customers?
• Periodic revenue: Do you have recurring
revenue streams? How much do customers spend during an average period?
You
do not have to calculate out LCV indefinitely. Many companies estimate their
LCV out for three to seven years.
Even
if it is an estimate, LCV gives you a much better idea of what value your
marketing campaigns are creating. For example, one small lawn care company sent
out 300 personalized mailers, and based on the initial campaign revenue, found
that the mailing barely broke even. However, the company’s customers tended to
be loyal over time. For every new customer it gained, the company knew that it
would have several years of recurring revenue. As a result, the owner estimated
the campaign ROI at 8000% on an LCV basis. That is an entirely different
equation!
How do you view your customers, on a one-off basis or over the long
term? Please give us a call at 440-946-0606
Or visit our website here for more information.
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