B2B customer life time value

In a post at the B2B Sales & Marketing Knowledge Sharing  blog, cites stats from a recent benchmark report.

The report, which was prepared by the IT Services Marketing Association (ITSMA), shows that B2B marketers most rely on three specific metrics to measure the success of their lead-generation activities.

The study’s must-have metrics?

They are:

Number of qualified leads
Number of closed deals
Revenue growth.

He argues that an often under utilized metric is just as important:

customer lifetime value (CLV).

He recalls how, in a previous position at a professional services firm, he calculated CLV to help fix an unsustainable business model. Calculating CLV, he says, exposed issues with price points, retention and average account size.

“While it is not commonly used, CLV is one of my favorite metrics to track because it is a ‘process’ metric,” Gillum explains. “It can help guide sales and marketing performance by ensuring that profitability, acquisition cost, and retention rates are being properly measured.”

According to him, tracking CLV can serve as an “early warning” that you might be:

Targeting the wrong audience. Too small? Too focused?

Creating the wrong type of leads. Is the value of the lead worth the cost?

Promoting the wrong offer. Are you encouraging the right customer behaviors?

Setting the wrong price point. Did you consider the true cost of the sale?

Having a retention and/or account management issue. “This will show up quickly (the ‘leaky bucket’),” he notes.

“[I]t is important to track and understand the CLV goal or baseline,”

“Marketers that ignore this important metric are in danger of missing out on an early indicator of top-line performance measures.”

The Po!nt: Consider the whole equation. Take a fresh look at CLV as a factor in your overall success. Doing so could highlight challenges affecting the bottom line across your organization. #Seoppcguru 

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