Are You Calculating Lifetime Value Wrong? – Guest Post

In marketing, there are widely regarded experts who advocate for the same methods, ad infinitum. Why question what’s widely known? Famous Silicon Valley investor and entrepreneur, Peter Thiel, begs a very significant question, “What important truth do very few people agree with you on?”

It’s difficult to swim up the intellectual stream, hypothetically speaking, and challenge the status quo. We found a question up for debate when calculating customer lifetime value, the estimate of how long a single customer will remain a loyal patron.

Many people default to calculating customer lifetime value with gross revenues, not profit. This may seem like a trivial difference when considering the calculation of customer lifetime value is a projection and not based in fact. We argue that profit margins should be considered when estimating CLV, but first, what other factors contribute to customer lifetime value?

How to Calculate Customer Lifetime Value

CLV = Average Value of Sale × Number of Transactions × Retention Time Period

Typically expressed as total revenue, it can be argued that this equation needs another component — profit margin.

CLV = Average Value of Sale × Number of Transactions × Retention Time Period × Profit Margin

Why Express Customer Lifetime Value as Profit?

There are many factors that contribute to a company’s bottom line. The revenue obviously represents the top line figure which is then subsequently strained by the costs of doing business. Unfortunately, no cost structure is ever safe from the effects of macroeconomics.

Prices of raw materials, utilities, and labor are all subject to change. Why then would you calculate the lifetime value of customers without taking profit margin into consideration?

This also represents the actual financial gain that can be expected from a customer in the long term. Customer lifetime value can also signal how viable current spending on customer acquisition is. If, for example, the cost to acquire a customer was $100 and you calculated CLV as $200, in terms of revenue, you might feel secure in your business model.

Recalculating CLV after reading this article you discover your profit margin cut this number down to only $80. So, you’ve been spending $100 to acquire a customer, but only estimate you will make back $80 over the life of the average customer. This is the sign of a business model doomed to fail.

In the visual below, CleverTap recommends expressing customer lifetime value in terms of real earnings and includes tips to increase your customer lifetime value.

calculate customer lifetime value example

How to Give Yourself More Time in the Day


I don’t have to tell you that you have too many tasks and not enough time to do them. That is the current state of affairs for almost all employees at any level of your company – all companies.

Productivity is the name of the game. How much can we get done in the hours we have allotted? How close can we get to our goals given the resources we have allocated to us?

And so we are all left hoping for more time in the day. Luckily, there is a way to get it.

And it comes from having an honest conversation with yourself (possibly your manager) about your to-do list.

I want you, every day for one week, to move through your to-do list item by item and ask yourself three questions for each task you encounter.

1) Can this be eliminated?

“I’ve always done it that way.” It’s one of the most common answers to the question “why”. And that’s when the WHY question is asked at all.

For each task on your to-do list, you better make sure there is a reason it needs to be done, and done in the way that you have been doing it all this time. Most people will find that they are taking time out of their day to perform a function that serves no purpose, other than checking a box.

Nobody is paying you to be a box checker. They are paying you to help the company succeed. And one way you can do that is to eliminate all unnecessary and superfluous responsibilities from your to-do list.

2) Can this be automated?

Technology is moving at a rapid pace, and computers can do more than most of us ever dreamed possible. The rise of machine learning and AI, along with the increased proficiency of data analysts and data scientists across industries, means that most of the tasks you are responsible for today will be done by computers in the near future. And many of them can be done by computers today.

That’s why the first question you should ask yourself for each task that cannot be eliminated is, can this be automated? Is there a way to get this task completed automatically, on a daily or weekly or monthly basis? How much work would be required to set that up, and how much time would that free up for me and my team once it’s done?

At this point, anything you are still doing by hand that can be done equally as well by computer is taking time away from more important tasks for no reason.

3) Can this be delegated?

If a task cannot be automated, perhaps it is still not something that you should be spending time on. As you move up the ladder at an organization, the expectation is that you are more valuable to the company, and therefor so is your time. The day to day tasks that used to fill your schedule are no longer your immediate priorities.

But someone still has to do them, right? So these are the tasks that you should be looking to hand off to someone else on the team. Whether you have direct reports you can assign tasks to, or you have to work with a manager to determine who should be taking on the work you used to do, now is the time to hand off those responsibilities.

Your time is too valuable to be spent working on tasks that could be handled by a more junior member of the team.

This is What the Future of Online Shopping Will Look Like

The ability to shop online has been available for many years now, but it has never been quite as popular as it is today. For many, it is part of their daily routines, and they simply couldn’t imagine life without it.

New technologies are continuously being developed to give us, consumers, a better online shopping experience, and it is these updates and changes that are likely to shape the future of the ecommerce industry.

According to the infographic below originally published on Subscriptionly, by the end of this year alone, global ecommerce sales will be through the roof.

There is a range of reasons why sales are increasing, and one of them is the development of mobile technology. Currently, smartphones are used a lot more than desktop computers for researching and browsing products. Although sales on mobile devices have not quite caught up with desktop sales, it is certainly a number that is steadily growing.

Other development that could be contributing to the growth is the fact that the speed of delivery is getting consistently faster. There was a time when businesses would laugh at the idea of next day delivery, but today it is almost expected as it is a service that everyone offers. In fact, there are some companies already providing same day delivery, while others can even deliver products in a matter of hours.

What consumers like is the fact that online shopping is gradually finding ways to fill the gaps that previously only physical shops were able to do. Another great example of this is the social side of offline shopping, but with the help of social media, online shopping is becoming social too.

You can find out a lot more about what the future of online shopping brings by taking a look at the infographic below.

60 Stats & Trends That Will Define The Future of E-Commerce

A Simple Matrix to Prioritize Your Marketing Efforts

One of the most difficult things to learn how to do as you grow your career is manage your time. That is because your responsibilities change with the roles that you serve in, the value you bring to the team, and the expectations put on you by various managers.

When you are just starting out, the expectations are often clearest. Someone else is setting your priorities, or at least defining clear goals. So the most difficult part about managing your time is learning how to do things correctly in the shortest amount of time.

But as you move up from that first position, more will be asked of you. You may serve on different teams, and wear different hats. You may have competing priorities, in service of different, but equally important company goals. Here, it is important that you learn how to prioritize your time on the most important matters. And often that means learning how to automate, delegate, or eliminate lower-level tasks.

If you are lucky enough to move into a management role, where you are presiding over a team of people and have more of a say in your company’s strategy, this skill is critical. You will fail unless you know how to set priorities. And you will be expected to help others set priorities as well.

Unfortunately, this is a skillset that is not taught in any class. It’s one that you are expected to learn on your own. If you’re lucky, you have a manager or mentor who can help.

If not, let me offer a simple 2x2 matrix you can use to determine where your team should focus it’s time and energy.

The Matrix

What you need to do to start out is create a full list of all the projects you are considering. Usually, this list is far too long for the size of your team and the resources allotted. That’s a good thing – a sign of an ambitious agenda. And it’s the precise reason that we need the matrix, to help us prioritize.

For each item on the list, then you are going to rate it’s potential impact and its level of effort required. For both, you are either going to list them as High or Low. For example, if you think a project is likely to lead to big gains in revenue but take your whole team six months to complete, you might rate it High for both impact and effort.

To construct the matrix, we need a sheet of paper with four quadrants. On the vertical axis, we are going to put “IMPACT”. On the horizontal axis, we are going to write “EFFORT”. Then divide them up into High and Low, so that you are left with something like this:



Once you have everything on your list categorized into one of the four quadrants, you are ready to prioritize.

High Impact/Low Effort

Always start working on projects in this quadrant. These are your easy wins. That you expect high returns for low cost, or low effort, is a sure sign that these are the projects where you will get the greatest “bang for the buck”.

Focus on these first and ignore the others until everything here is done.

High Impact/High Effort

We always want to maximize our impact. With that in mind, though some might argue to focus next on the other projects that don’t require much time or resources, I would recommend jumping to the high impact, high effort projects. These are those priorities that will require a significant amount of investment, but when all is said and done, your company will reap the rewards for your expenditure.

Low Impact/Low Effort

Low impact projects may not mean that much to your company in terms of improvement on the grand scale, but if it doesn’t take much to achieve incremental gains, they are still worth doing. These projects may make even more sense if your team is under pressure to produce short term wins, or lacks the resources to complete your higher impact projects.

Getting these items done checks a box and moves you in the right direction, even if it is in smaller steps.

Low Impact/High Effort

Anything that winds up in this quadrant should stay off your to-do list. It’s going to cost a lot to get done, without providing significant benefits to your team or your company. This is grunt work, and if you find yourself working on grunt work, you are ignoring potential successes elsewhere.

How Effective Customer Service Can Boost Customer Loyalty - Guest Post

The following is a guest post from Garret Norris. Garret is the founder and CEO of Healthy Business Builder and through his company, remains dedicated as ever to use his training and real-life business experience to meet his passion for seeing business succeed through disciplined management, creative marketing and committed client service.

Building a strong customer relationship and satisfaction that leads up to customer loyalty is possible through improved quality of customer service.

Having excellent customer service can lead to an increase in customer retention.  When you tend to your customer’s needs, over time, you’ll be able to build a relationship with them which results in repeat sales.

On the other hand, once you missed their expectations, they are more likely to switch to another competitor who can provide a better experience while dragging down your reputation along with them.

A single bad encounter with a customer service representative could cause a ripple effect on your business. While there are 72% of customers who would share good experiences with others, 62% would likely share the bad as well.

If your business provides a less than satisfying experience, chances are your reputation would take a hit from the bad reviews and complaints you’ll get. New customers rely less on advertisements and sales reps than recommendations from people they know such as family and friends.

Excellent Customer Service Means Making Returns Policy Easier

Before making a purchasing decision, some customers look at a company’s return policy for basis. Offering hassle-free returns is essential to your overall approach to customer service as it is not only great for persuading new customers but also boosts existing customers’ loyalty.

While a lenient policy resulted in more returns, it also led in an increase in purchases.

A study showed that free returns could boost spending by up to 457% of pre-return spending.

Items that are easy to return gives customers enough confidence to make and repeat purchase.

Compared to an organization with a generous return policy, firms with a stricter policy decreases consumers’ willingness to buy a product. Creating rules that discourage customers from returning products, such as fees, reduces spending and a business decreases to 75%- 100% by the end of two years.

Another factor that lessens a customer’s motivation to make a purchase is a deadline. A short time frame also creates pressure around the decision to return an item. Meanwhile, a longer return period would take away that urgency. The product would eventually grow on the consumer.

Researchers at the University of Texas-Dallas find it may be a result of the endowment effect. It means that the longer the customers hold on to a product, the more reluctant they’ll be to part with it.

Of course, returns come with a cost that your company has to cover but making a returns policy easier can increase customer satisfaction.

Excellent Customer Service Fosters Efficient Delivery

One of the root causes of customer service issues revolves around delivery. Poor delivery services discourage customers from doing business with your company again. 

A study shows that late deliveries makes 17% of consumers abandon business with a company after one delivery and 55% of customers left after two to three times.

Delivery can be a real challenge, especially for smaller business. Not only do you need to provide high quality and reliability for customers, but you also need to keep costs down which means relying on couriers. While you can control the quality of your product and customer service, you have to trust your courier not to undo your hard work.

You might not be able to control when deliveries arrived, but you can set customer expectations around the delivery. Your customers would be kept happy by under promising and over-delivering.

If you promise delivery within a few days, then ship everything overnight or priority, customers would be left with a significantly more favorable impression on your company. On the other hand, if you promise overnight delivery, and then there are delays, your customers may think negatively.

Excellent Customer Service Means Giving a Quick Response

One of the essential factors with effective customer service is speed. Responding quickly to your customers with their inquiries or complaints keeps them from moving their business to the competition since they expect and demand fast services.

A fast response is especially necessary for a customer sharing their bad experience. This would leave them with a good feeling and memory that overtakes any unpleasant incident. It would make them feel important.

The longer your representatives take to respond, the greater the chance you’ll lose your customer, but there will be times when a slow response couldn’t be helped. Sometimes, slow response is due to not having anything to tell, the lack of updates or changes to communicate.

Immediate request is not the only way to keep your customers happy but giving a timely response. Customers understand that orders could take time and some things cause delay. Sometimes a response to their inquiry is enough.