Understanding challenges & finding solutions
Customer Lifetime Value (CLV) is a metric that all businesses would love to be able to easily measure so that marketers can say to the business “x% of customers have been with us for x years and they have downloaded x whitepapers and purchased x amount of products/services with us…and they’ve referred x number of customers to us”. It’s a lot x’s but you get the premise. That’s the holy grail, right?
Not many marketing teams have a sophisticated enough system to allow them to do this so what are the challenges marketers face? With all the advanced technology readily available this, in theory, should be simple but in reality it’s not as straight forward. Marketers face a plethora of challenges when it comes to tracking and implementing CLV. Anyone ever said to their CFO “Can I have tens, maybe hundreds.
of pounds to measure something that you won’t see an instant return on but it will help marketing to identify our loyal customers over the next decade?” If so, let us know how that conversation went (assuming you’re still in the same role and weren’t laughed out of the office).
Naturally marketers face different challenges depending on what industry they work in, but in addition, each company will be at different stages with regards to monitoring their CLV thus creating a whole new set challenges.
From speaking with our network of B2B marketers, they identified the following challenges when it comes to measuring CLV:
- Extracting data from multiple sources into one platform and organising it.
- Convincing stakeholders about the benefits of understanding the CLV (long term financial rewards & brand reputation)
- What technology is currently affordable for your business.
- Company culture – are employees willing to change and learn new systems? If so, this must be led by the top
- The business prioritising short-term goals e.g. monthly targets, over the long-term benefit of understanding CLV.
- Mapping the customer journey. Many firms have historical systems which just don’t do this. For companies that acquire businesses then point 1 above becomes even more tricky. It’s similar to putting many pieces of a puzzle together.
So, now that we’ve identified the main challenges, how can this be solved? Well, there isn’t one perfect answer. however, an increasing number of organisations we work with are beginning to employ Data Scientists to assist with analysing and understanding the vast amount of data available and identifying how this can be mapped into a CLV.
One start-up organisation who I recently spoke with said that because they are building their database from scratch they have stakeholders who understand CLV…it does also help that their stakeholders have invested a vast amount of money into the business.
From speaking with senior marketers, the advice they have for marketing departments is:
- Be realistic about what they can achieve with the technology currently available
- Identify what the outcomes will be
It’s great to be able to measure CLV but what decisions and actions will come from it? Once those steps are identified then it’s a case for going to the board, presenting your argument and making sure there is a commercial element to your work, not just that we can identify good and bad customers.