Marketing Essay Example on Customer Lifetime Value

Published: 2022-10-24
Marketing Essay Example on Customer Lifetime Value
Type of paper:  Essay
Categories:  Marketing
Pages: 5
Wordcount: 1227 words
11 min read

1. Explain what customer lifetime value is, as it's described in the WSJ article.

The Customer Lifetime Value (CLV) is a calculation of the net profit of the entire future association with keeping a particular customer. Customer Lifetime value is a score that considers the customer's account information such as how often a customer calls for an inquiry and how frequent they call to register complaints (Laudon & Traver,2017). A company treats its customers according to the value CLV cost that they have. Many times, companies do not perceive much value in doing business with the customers that give complaints all the time. Good scores are provided to the customer who is regular with positive feedback to the company. Special treatment is assigned to a customer with a high score and the ones with the lousy score are not given much attention value. In the customer care service feedbacks are given even through other social media platforms like Twitter and Facebook.

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The way that a customer care representative talks to you determines the feedbacks you give on the platforms that they are involved in. When two customers provide a call to the customer service to register the complaint, and they are treated differently means that one of them has a higher CLV cost than the other. When one of them is told to hold, and the other person does speak directly to the service provider, means that the person whose call is received has recorded an excellent score regarding the quality of complaints that he gives such as an appreciation of the services rendered for a long time. Also, the CLV score determines the prices that one pays for the product and the adds that they can view (Laudon & Traver,2017). A good score makes the customer get a bountiful discount on payments as compared to the other customer with a bad rating.

2. Discuss TWO examples of companies that use customer lifetime value metrics, and how they use the parameters to tailor their customer services and support.

Amazon and Swiss Rasoi are examples of companies that use customer lifetime value metrics to tailor their customer services and support. Amazon has information on what its customers like to buy and the reaction they have on each item viewed. This is because of their personalized web involvement with product recommendations. Amazon tailors its website based on the previous purchase behavior of a customer. The more you return the products, the more the cost on the return value. Customers who purchase the most expensive goods on the website get a fifty percent return rate.

The Swiss Rasoi company has managed to create content that is recognized fast with a callout that is clear. Swiss Rasoi offers its best customers a different opportunity for saving on the ingredients that are of quality. Also, the company gives back to its loyal customers a discount through the loyalty programs. According to Swiss Rasoi, the more someone purchases with them is the less they pay for the product. Through these two methods, the customer can find specialized customer care services tailored just for them for their loyalty. These two companies calculate the rate at which specific customer purchase from their online shops carefully. With the increased advertising of social media, customer's loyalty can be measured through their clicks on the items and the number of purchases they make per product.

3. Discuss TWO examples of the types of data points that companies incorporate into their customer lifetime value calculations. For each data point, explain why it's a useful indication of customer value.

When doing a lifetime calculation, companies often incorporate the use of data points. Example of the data points that companies may use include the cost that is used to acquire a customer and monetization. When calculating, it is required that many businesses place their primary focus on the transactional value but do not forget the experience that happens after the change. The amount of the customer represents the average monetary value that is brought by each purchaser (Hill & Alexander, 2017). To get the value of the customer, the company multiplies the average order value and the frequency of purchase. The purchase frequency represents some orders that each customer places, while the ordinary law represents the average money that the customer spends each time they place an order.

These data points also have variables, and they may include the recency frequency and monetary value. The variables are then put in a value scale mostly of 1-3, one being the list valuable a three the most valuable. The data value is calculated according to the entry that each customer makes through purchase. In the case of Recency, the customer is awarded a three which is the highest only when they have purchased again within a small period mostly less than four months (Hill & Alexander, 2017). Additionally, if the customer makes purchases between four to eight months, they are ranked averagely with a 2. The same calculation is applied to the frequency of purchase and the value of the product. E-commerce merchants align the data according to consumer preference to determine the things that shoppers deserve to receive. The higher the score, the lesser the price paid by the customer. Defining the customer value is beneficial to the business as it helps the growth of a company through the analysis of customer purchase data.

4. From Chapter 9, Discuss the trends were taking place in the online financial services industry.

Different financial companies are now focusing on meeting the specific needs of the contemporary consumer. This includes an incredible customer experience with the business through service offered at the lowest market price. There is also the introduction of a mobile transaction trend in the retail market. Through the e-commerce platforms, the customers can find products at more economical and much achievable prices. E-commerce also provides a lower cost of entry, cost of operation and increased efficiency (Laudon & Traver,2017). The online business has succeeded in creating new platforms for the variety of firms that offer a broad and single range of products. Online retail has moved forward to integrate the physical store with web operations. This is achieved by putting the locally used goods in location-based marketing. Also, there are trends in the growth of mobile platforms.

Another trend in business is the introduction of cloud in the business financial sector. Many companies that deal with large amounts of data have their focus on using cloud computing to increase security and achieve increased efficiency. Also, there is a trend of big data in the financial industry. Big data has penetrated through data science, business intelligence, and analytics. There is a boom in the commercial business for professional analytics due to increasing demand for large data management services. Companies adopt a technique that builds clients with potentials in the purchase. Adaptation of different modern trends in marketing and financial sectors have led to the promotion of sales and increased profit. The introduction of Fintech innovators has made the financial service industry simple to penetrate. These are companies that aim at providing user experiences that are highly personalized. The finch principle also includes customizing user's interests with affordability in price to specified users.


Hill, N., & Alexander, J. (2017). The handbook of customer satisfaction and loyalty measurement. Routledge.

Laudon, K. C., & Traver, C. G. (2017). E-commerce 2018: Business, Technology, Society. Pearson.

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