How Are Marketers Tracking Customer Lifetime Value?

March 17, 2021

CMOCouncil How Marketers Measure LTV Mar2021Although customer lifetime value has been a priority for marketers for some time now, their proficiency at tracking it is wanting. A report [download page] from CMO Council and Deloitte Digital shows that fewer than 1 in 5 CMOs believe they track customer lifetime value (LTV) extremely well (4%) or very well (13%).

Indeed, the majority of the 150 global senior marketing leaders surveyed rate their ability to track LTV about middling, at the best. A little more than one-third (35%) say they are able to track LTV moderately well, while others say they track it slightly well (23%) or not well at all (24%).

For the most part, revenue per user is one of the core components used most by respondents to measure LTV, with two-thirds saying they track this metric. Slightly fewer than half (45%) measure transactions per user, while about one-quarter (26%) use sessions per user as a core component of their LTV measurement. There are also some senior marketers that say they use page views per user (18%), session duration per user (17%) and goal completions per user (17%) to measure LTV.

Close to half (47%) of respondents also say they refresh their LTV measurement on a quarterly basis, with one-quarter doing so more frequently – on a monthly basis – and 28% conversely doing so on a yearly basis.

This is not to say that marketers aren’t keen to deepen their analysis of LTV. Indeed, some 44% say that they are prompted to do so in order to have a strategic organizational focus on customer retention and value creation.

Who’s Using LTV?

While there is a long-standing disagreement over who is most responsible for customer experience and, to some extent, customer-facing digital transformation, there is little debate over who owns customer lifetime value. The largest share (32%) of respondents say that the CMO owns it. There are some who believe that the chief revenue officer (16%), the head of sales or strategic accounts (14%) or CEO (9%) owns LTV, but it does look as though this area of strategic growth and profitability is the responsibility of marketing.

That’s not to say that other departments aren’t leveraging LTV to drive their strategic decisions. The report indicates that several areas are using this data for decision-making, including the CEO/board members (53%), heads of sales or strategic accounts (49%), line of business leaders (44%) and heads of business development (38%). To some extent CFOs (35%), chief revenue officers (33%) and CEOs (18%) are also leveraging LTV to drive strategic decisions.

Connecting with Customers

Marketers have used several tactics in order to improve LTV, but one that has been found to be effective is having personalized interactions with customers. Email remains one of the most effective channels when it comes to connecting with customers, with more than half of respondents finding it extremely (17%) or very (39%) effective. Email’s continued effectiveness is also echoed in a recent study from Validity and Demand Metric.

That said, other channels such as interactions with service/support (74%), interactions with sales reps (66%) and in-store/in-person interactions (64%) were the most cited channels that were extremely/very effective in connecting with customers.

On the other end of the spectrum, some of the least effective channels appear to be mobile detection (location, behavior and patterns) and IoT, with only 16% and 14% rating these channels extremely or very effective, respectively.

And, although senior marketers say that data insights such as level of satisfaction (44%) and LTV (41%) would help them to better qualify and maximize the potential value of customers, 55% say that aggregating the right data for a robust view of the customer has proven to be one of their biggest challenges to developing lasting customer relationships.

The full report can be found here.

About the Data: Results are based on a Q4 2020 global survey of 150 senior marketing leaders.


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