Gartner Research

How to Calculate Customer Costs to Identify Your Most Valuable Customer Segments

Published: 31 July 2018

ID: G00347090

Analyst(s): Anna Maria Virzi

Summary

Marketers need to balance precision against effort when measuring customer profitability or customer lifetime value. This research is an introductory look to help marketing analytics leaders work with finance to understand the trade-offs when developing a measurement approach.

Table Of Contents
  • Key Challenges

Introduction

Analysis

  • Define the Scope of the Customer Profitability or LTV Analysis by Clarifying Business Questions You Want to Answer
  • Select an Approach to Measure Customer Profitability or LTV, Balancing Accuracy With Effort
  • Identify the Right Metrics to Measure Customer Profitability
  • Build an Estimate of Customer Lifetime Value by Starting With Your Most Successful Product — or One That You're Concerned About
  • Track Different Types of Customers and Buying Patterns Over Time to Inform Customer Acquisition and Retention Strategies
  • Avoid Traps When Tracking Customer Profitability, LTV or Customer Acquisition Costs

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