Whether your marketing strategies are focused on customer retention, customer acquisition, or a combination of both, and regardless of your various media choices such as direct mail, print marketing, internet marketing, trade shows, public relations, social networking or others, without a “best customer” approach, chances are you’ve been hanging by a thread from your past marketing efforts. Or just hanging out.
Your best customers were probably once your best prospects, and it is likely that most of your marketing efforts were built around finding and attracting them. Acquiring and understanding best customer knowledge through segmentation provides a vital focus for campaigns and strategies, and for sales reps.
How do you find this “best customer knowledge”?
A big part of knowing your customers, in order to use the information to target prospects, is understanding their
CLV = CS - (COGS + COCS)
CS = Customer Sales
COGS = Cost of Goods Sold
COCS = Cost of Customer Services Provided
The thought process behind the formula, and how to pull the data together for this level of segmentation, is discussed in more detail in the InfoGrow white paper “Why You Should Care About CLV.”
There is one more element that needs to be added to this base formula: time. The amount of time that a customer stays a customer is referred to as the Customer Retention Period (CRP). The CRP is incorporated in the (CS- (GOGS + COCS)) formula because a true picture of Customer Life Value is based on how long the customer remains a customer; thus, CLV = (CS- (COGS + COCS)) x (CRP).
When CLV data is integrated with Dynamics CRM, you have a strategic asset that lets your team extract more value from your customer base -- targeting the right prospects and yielding increased revenue and profit.
Getting to this point is a multi-step process requiring discipline across the organization. However, the big payoff is the conversations within the organization prompted by the CLV segmentation effort. These conversations will help you move forward in achieving the core Dynamics CRM benefits:
- Increased profitability and reduced costs through streamlined sales and marketing processes
- Faster response to customer requests
- Up-sell and cross-sell opportunities
- Improved closing rates
- Targeted marketing campaigns via better customer profiling and segmentation
- Increased customer satisfaction, loyalty, sales, and retention
- Greater sales territory market share
Using CLV with Dynamics CRM allows you to pull the information into one spot so that marketing, sales, and customer service are focused on knowing which customers you want to keep and where to find your next potential best customer.