Customer Lifetime Value and Customer Aquisition Cost reviews from a small business prespective, presented at Narayna Labs EGADE start up series...May 2014 by Dr. Salvador Trevino-Martinez, Global Marketing Strategy Professor. Tecnologico de Monterrey. For Lecture purposes only

1. Customer Value: Business
Value
Customer Lifetime Value
Customer Acquisition Cost
Dr. Salvador Treviño-Martinez
National Alumni Relations Director
Global Marketing Strategy Professor
Tecnológico de Monterrey
EGADE Business School

2. AGENDA
 CUSTOMER VALUE
 BUILDING CUSTOMER VALUE
 CUSTOMER LIFETIME VALUE
 CONCEPT
 FORMULA
 APPLIYING IT TO YOUR BUSINESS
 CUSTOMER AQUISITION COST
 CONCEPT
 FORMULA
 APPLYING IT TO YOUR BUSINESS
 FINAL REMARKS
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3. MARKETING CLUES TO CUSTOMER VALUE
EXCHANGE
SATISFACTION
MUTUAL BENEFIT
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4. WISEGEEK.COM DEFINES CUSTOMER VALE
IS THIS CUSTOMER VALUE?
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5. NIKITA JETHANI´S PROPOSITION TO BUILDING
CUSTOMER VALUE
 IS THIS HOW YOU BUILD CUSTOMER VALUE?
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6. Customer Lifetime Value
 What is the value of a business relationship
over time?
 Loyalty over promotion value
 Measuring the so-called VALUE
 Two approaches: Qualitative AND
QUANTITATIVE
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7. Customer Lifetime Value
Qualitative approaches
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8. Customer Lifetime Value
Quantitative Approach
From Farris and coauthors´ Marketing Metrics Textbook:
CLV IS DEFINED AS: THE NET PRESENT VALUE OF ALL FUTURE CUSTOMER CASH
FLOWS DURING ITS RELATIONSHIP WITH THE COMPANY
FORMULA:
CLV =
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9. EXCERCISE
 From zeromillion.com site, a useful spreadsheet
 http://www.zeromillion.com/marketing/determining-lifetimevalue.html
 Instructions
 1. Download spreadsheet
 2. Enter actual or estimate information
 3. What does the outcome value mean?
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10. CUSTOMER AQUISITION COST
GENERAL APPROACH
MUCH SIMPLER THAN CUSTOMER LIFETIME VALUE
THE IDEA IS TO ESTIMATE HOW MUCH MONEY IS SPENT GENERATING,
MAINTAINING OR LOSING CUSTOMERS
GREAT INSIGHTS FROM THE DATABSE MARKETING INSTITUTE
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11. EXCERCISE
 http://blog.priceintelligently.com/blog/bid/189868/A-Guide-to-SaaS-
Metrics-and-Your-Pricing-Strategy-Customer-Acquisition-Cost
 How do you apply this formula in your business?
 What expenditure-items can you consider “acquisition costs”
 What does the outcome of this formula imply?
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12. FINAL REMARKS
 IMPORTANCE OF CUSTOMER DATA AND RECORDS
 NON-INTRUSIVE; PERMISSION MARKETING APPROACHES
 FORMULAS ARE ALWAYS SUBJECTIVE AND SUBJECT TO
IMPROVEMENT
 DATA EVOLVES OVER TIME, THINK IN TERMS OF FUTURE
RELATIONSHIPS
 CUSTOMER LIFETIME VALUE AND CUSTOMER AQUISITION
FORM ARE TOOLS FOR DECISIÓN MAKING.
 SERVICING THE CUSTOMER IS WHAT REALLY MATTERS
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